How much does Medicare cost if you are still working?

Whether you should get Medicare at 65 while still working depends on the size of your employer and your health savings account.

✅ Large Employers (20+ Employees)

If your employer has 20 or more workers, you do not have to sign up for Medicare right away.

• Delay Part B: You can safely delay Part B without late penalties.
• Free Part A: You can sign up for premium-free Part A as secondary coverage.
• HSA Conflict: Stop HSA contributions 6 months before enrolling to avoid tax penalties.

⚠️ Small Employers (Fewer than 20 Employees)

If your employer has fewer than 20 workers, you generally need to sign up for Medicare Parts A and B at age 65.

• Primary Payer: Medicare becomes your primary insurance.
• Coverage Risk: Your work plan may pay little or nothing if you do not enroll.
• Avoid Penalties: Sign up during your initial window to prevent gaps or costs.

💡 Prescription Drug Coverage

• Creditable Coverage: Keep your employer drug plan only if it is "creditable" (matches Medicare's value).
• Avoid Penalties: Sign up for Part D later if you lose creditable work coverage.

Your Medicare costs while working depend primarily on your work history, your current income, and your employer's size. If you or your spouse paid Medicare taxes for at least 10 years (40 quarters), Medicare Part A is $0 per month. However, Medicare Part B costs a standard baseline of $202.90 per month, which could be higher depending on your income.

1. The Cost Breakdown by Medicare Part

If you choose to enroll in Medicare while still employed, the primary costs include:

• Part A (Hospital Insurance): $0 per month for most people. If you do not have the 10-year tax history, it can cost up to $565 per month.
• Part B (Medical Insurance): The standard monthly premium is $202.90.
• Part D (Prescription Drugs): Premiums vary by private plan, averaging around $35 per month.

2. The High-Income Surcharge (IRMAA)

Because you are still working, your current earnings could trigger the Income-Related Monthly Adjustment Amount (IRMAA). Medicare uses your tax returns from two years prior to determine if you owe a surcharge. For example, if your modified adjusted gross income (MAGI) from two years ago was higher than $109,000 (individual) or $218,000 (joint), your Part B premium will scale upward from $284.00 to as high as $689.90 per month.

3. Your Employer's Size Dictates Your Strategy

You may not actually need to pay for Medicare Part B yet. Your next steps depend heavily on how many employees work at your company:

⚠️ Critical Warning for Health Savings Accounts (HSAs)

If you actively contribute to a Health Savings Account (HSA) through your job, enrolling in any part of Medicare (including the free Part A) completely prohibits you from making pre-tax contributions to your HSA. Doing so triggers immediate tax penalties from the IRS.

My primary recommendation: If you work for a large employer (20+ employees) and wish to keep building your HSA tax-free, delay enrolling in Medicare entirely until you officially retire or lose that employer coverage. When you eventually stop working, you will get an 8-month Special Enrollment Period to sign up for Medicare penalty-free.

Most people do not pay a premium for Medicare Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters).

Almost everyone must pay a standard monthly premium for Medicare Part B, but certain groups receive financial assistance that covers or eliminates these costs.

Premium-Free Medicare Part A

You get premium-free Part A if you meet any of these rules:

• You or your spouse worked and paid Medicare taxes for at least 10 years.
• You are eligible for or receive Social Security or Railroad Retirement benefits.
• You worked as a government employee in a job where you paid Medicare taxes.

Who Receives Help With Part B Premiums

While standard Part B premiums are required for most enrollees, specific programs pay the premium for low-income individuals:

• Qualified Medicare Beneficiary (QMB) Program: State programs that pay Part A and/or Part B premiums, deductibles, and coinsurance for low-income individuals.
• Specified Low-Income Medicare Beneficiary (SLMB) and Qualifying Individual (QI) Programs: State programs that help pay the Part B premium.
• Medicaid: Low-income beneficiaries who qualify for both Medicare and full Medicaid receive assistance with their medicare costs.
• Extra Help Program: Helps eliminate or reduce prescription drug plan (Part D) premiums for qualifying low-income individuals. You can check guidelines via the National Council on Aging.

Original Medicare (Parts A and B) does not cover several major healthcare needs, most notably routine dental care, eye exams and glasses, hearing aids, long-term custodial care, care outside the U.S., and cosmetic surgery.

Key Uncovered Services

• Routine Dental Care: Original Medicare excludes routine cleanings, fillings, tooth extractions, root canals, and dentures.
• Vision Care: Routine eye exams, eyeglasses, and contact lenses are not covered, except for specific post-cataract surgery needs or certain diabetic eye exams.
• Hearing Aids: Routine hearing exams, fittings, and hearing aids are completely excluded from standard coverage.
• Long-Term Care: Medicare pays for short-term skilled nursing, but it does not cover ongoing custodial care (help with daily activities like bathing, dressing, or eating) in a nursing home or at home.
• Care Outside the U.S.: Medical treatment received while traveling or living abroad is generally not covered.
• Cosmetic Surgery: Elective procedures meant to alter appearance rather than treat a specific illness or injury are excluded.

You can review the official breakdown of excluded services directly on the Official Medicare Coverage Guide.

Yes, Medicare checks your income every year to see if you must pay an extra charge called IRMAA (Income-Related Monthly Adjustment Amount).

How Annual Income Checks Work

• Two-year lookback: The Social Security Administration (SSA) looks at your federal tax return from two years prior to determine your current year's premiums. For example, your income from two years ago dictates your costs for Part B (medical insurance) and Part D (prescription drug coverage).
• Automatic review: The SSA checks your tax data with the IRS every year without you needing to reapply.
• Sliding brackets: If your Modified Adjusted Gross Income (MAGI) goes above set limits (starting at $109,000 for single filers or $218,000 for married couples filing jointly), you pay a higher monthly premium. If your income drops or rises later, your surcharge updates in a future year to match that new two-year-old tax data.

Changing Your IRMAA

• Life-changing events: If your income drops because of a major life event—like retirement, marriage, divorce, or the death of a spouse—you can ask the SSA to use your current lower income instead of waiting two years.
• Appeals: You can file an appeal using Form SSA-561 if your recent tax data does not reflect your true current financial state.