Mistake #3: Not Signing Up If You Are Still Working

by David Bynon, last updated

In our second article in the Medicare Mistakes Series, we discussed why it is a mistake not to enroll in Medicare at age 65. In Mistake #3, we’re going to address an equally important topic, not signing up for Medicare if you are still working.

If you are still working at age 65, yes, you should enroll in Medicare. At a minimum, you should enroll in Medicare Part A. Enrollment in Medicare Part B depends on whether or not you have coverage through your employer.

Key Takeaways

  • Medicare has various enrollment periods that determine when beneficiaries can enroll, change, or drop coverage.
  • Medicare enrollment periods are fixed and are not aligned with Social Security benefits or disability benefits.
  • At age 65, Medicare gives us an Initial Enrollment Period (IEP).
  • Your IEP is based on a 7-month period that begins three months prior to your birth month.
  • If you miss your IEP, late enrollment penalties may apply.
  • Some Medicare late enrollment penalties are lifelong.
  • Most people turning age 65 should signup for Medicare during their Initial Enrollment Period.

When to Sign up for Medicare if Still Working at 65

Medicare is a confusing topic. With so many moving parts, dates, deadlines, and options, it’s easy to miss a detail or two, which can end up costing you money, coverage, or both.

Medicare is not a health insurance policy that you can turn on and off like a switch. It has various enrollment periods, and the government wants you to follow them.1Medicare.gov, ”Joining a health or drug plan”, Accessed January 11, 2022

If you are thinking of delaying Medicare for a few years, maybe because you are working, healthy, or don’t want the added expense, think again. Consider and fully understand the consequences of delaying enrollment.

The only people who can successfully delay Medicare enrollment are those individuals with creditable group health coverage through an employer.

The federal government has the power to charge you penalties if you don’t enroll on time. Not only will you not have coverage if you delay enrollment, but you will pay more when you do enroll.2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

Your Initial Enrollment Period (When You Should Enroll)

For some people, Medicare enrollment happens automatically. For most people, it doesn’t. Regardless, your Individual Enrollment Period (IEP) is the same. It does not matter if you are still working or not.

Your IEP is a seven-month rolling period that includes:2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

  • The 3 calendar months before your 65th birthday
  • The month of your 65th birthday
  • The 3 calendar months after your 65th birthday

During your IEP you can enroll in Medicare Part A and Medicare Part B. You may also join a prescription drug plan (Medicare Part D) or a Medicare Advantage plan (Medicare Part C). Part C and Part D are private health insurance options.1Medicare.gov, ”Joining a health or drug plan”, Accessed January 11, 2022

If you plan to keep your Original Medicare, your IEP is also when you can buy Medicare Supplement insurance (aka, Medigap) from insurance companies. During your IEP you have a guaranteed issue right to get Medigap coverage.

This right guarantees that you can purchase supplemental insurance without going through medical underwriting (i.e., you can’t be turned down). This is critical if you have one or more chronic health conditions.3Medicare.gov, ”When can I buy Medigap?”, Accessed January 11, 2022

NOTE: If you live in Puerto Rico you will not receive Medicare Part B automatically. You will need to sign up for it during your IEP.4CMS.gov, ”Original Medicare (Part A and B) Eligibility and Enrollment”, Accessed January 11, 2022

Special Enrollment Period (When You Retire)

Your IEP is the best time to enroll. However, if you are still working and want to sign up for Medicare when you retire, you can ask for a Special Enrollment Period.

Medicare allows Special Enrollment Periods for special circumstances. These include:

  1. When you no longer have group health insurance;
  2. When you move out of your plan’s service area and no longer have health coverage; and
  3. When you have COBRA coverage and need permanent health coverage.

There are other circumstances that allow you to get a Special Enrollment Period, but they are outside this discussion.

If you already have Medicare Part A and you’re eligible to sign up for Medicare Part B through a Special Enrollment Period, you can apply online or by fax.

To apply you will need to complete form CMS 40B. You will also need to complete form CMS L564 (Request for Employment Information), and provide evidence of employment and proof of employer health coverage.

If you choose, you can fax your forms and evidence of employment and health coverage to your local Social Security office. The fax number is available on the SSA Office Locator.

If you don’t already have Part A you can apply online at SSA.gov/benefits/medicare or call Social Security at 1-800-772-1213 for more information.

Group Health Insurance Coverage

If you are still working past age 65, and you have employer health coverage, you might be able to delay enrolling in Medicare without a penalty.

It all depends on whether your group health insurance is creditable health coverage. If it is, great, you can sign up for Medicare when you retire. If it isn’t, you can’t, and you should sign up for Medicare at age 65.

The only way to know for certain is to call your plan and ask. Do not take accept the word of your company’s human resources department. They are not the ones that will incur a penalty. You will.

Also, for your protection, keep evidence of your employer coverage. Keep all bills, claims, and other correspondence. Chances are you will need it, to prove you had employer coverage when you do sign up for Medicare.

Enroll in Medicare Part A On Time

If you paid Medicare taxes for the required 40 quarters (10 years) needed for premium-free Medicare Part A, there is no reason not to sign up for Medicare at age 65. There is no cost for your hospital health insurance from Medicare, so there’s no reason to delay enrolling.

If you did not work and pay taxes for 10 full years, and you are still working and have employer coverage, you should delay enrolling in Part A for hospital insurance. This is particularly true if you plan to work long enough for premium-free Part A coverage.

Enroll in Medicare Part B On Time if Your Group Health Plan is Secondary

If your employer’s group plan pays secondary to Medicare, you need to sign up for Medicare Part B on time. Otherwise, you won’t have medical insurance coverage.

How many employees your employer has is a factor.

If your employer has less than 20 employees, Medicare is the primary payer. Your employer’s health insurance is not required to continue to offer benefits. Most small employers offering job-based coverage may require you to take Medicare.

Also, if your group health benefits are limited, Part B may pay for costs not covered by your employer’s health insurance. For example, Medicare Part B covers an annual wellness visit, various screenings, and most vaccines at no cost. Most group health plans do not cover these services at no cost.

A Health Savings Account May Not Be Creditable

Over the past decade or two, the Health Savings Account (HSA) became a popular way to pay for healthcare on a pre-tax basis. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and other expenses, you can reduce your overall health insurance costs.

HSAs only work with High Deductible Health Plans. These health insurance plans may or may not be creditable coverage for Medicare. Most are not.

Be sure to check with the plan to determine if it is creditable employer coverage. If the plan is not creditable and you delay enrolling in Medicare, there may be a penalty.

Medigap Protections While Employed

One of the most important protections Medicare gives us is the right to buy Medicare Supplement insurance. This is a short-term right that expires six months after our Medicare Part B benefits begin.

How does employment after age 65 impact our guaranteed issue right for a Medigap policy?

For the most part, so long as you maintain your employer coverage, you don’t have to worry about it. This is true even if you are enrolled in Medicare Part A.

Your guaranteed issue right starts as soon as your Medicare Part B benefits are effective. So, don’t delay enrollment.

In fact, start enrollment three months before the month you plan to retire. This way you will have your Medicare card and coverage will begin the first day of the month you retire.

Once you have your Medicare card, then you can apply for a Medicare Supplement plan.

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Coverage Though Your Spouse’s Current Employer

If you have health care coverage through your spouse’s current employer, you can delay Medicare enrollment. The rules for you are the same as they are for your spouse and all other Medicare enrollees.

When considering signing up for Medicare, remember that you can sign up for Part A now and Part B later. This way you can keep your spouse’s employer coverage, but use Medicare as your primary insurance for hospital visits.

You Also Need Creditable Drug Coverage

In addition to creditable coverage for your healthcare, you need creditable drug coverage. They are not one and the same.

Most employer coverage includes some coverage for prescription medications. This coverage may not meet Medicare coverage requirements.

If you are enrolled in Medicare Part A and/or Part B, you qualify to join a Medicare Part D plan for prescription drug coverage. Your employer coverage may be creditable if it meets the basic coverage standards of a Medicare Part D plan.

If your employer coverage does not include creditable drug benefits, you can join a basic Part D plan to get this coverage. If you delay coverage, penalties may apply.

Late Enrollment Penalties (Why Medicare Has Them)

When the Medicare program was signed into law in 1965, Congress realized that it would need a stick to get healthy people to join. After all, most people don’t like the idea of spending money on something they don’t use. So the law gives the Centers for Medicare & Medicaid Services and the Social Security Administration the power to assess penalties. After all, if only unhealthy people enrolled, the cost for these people would skyrocket.

Three of the four parts of Medicare have potential penalties, A, B, and D. These penalties affect your monthly premiums, not the deductibles, copayments, or coinsurance you pay when you use your Medicare benefits.5Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 20226Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 20227Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

Medicare Part A Late Enrollment Penalty

Most people (and their spouse) get their Medicare Part A coverage (hospital insurance)  premium-free by working 10 or more years and paying Medicare taxes8Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022. However, if you didn’t pay taxes for a minimum of 40 quarters (10 years), then you will pay a monthly premium for your Part A coverage. A penalty may apply for late enrollment.5Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022

If you miss your IEP or intentionally delay Medicare Part A enrollment:5Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022

  • Your Part A monthly premium will be increased by 10%.
  • The 10% penalty will continue for twice the number of years you were not enrolled when you were eligible.

Medicare Part B Late Enrollment Penalty

Everyone eligible for Medicare pays a Medicare Part B premium, for their medical insurance, when they enroll. Medicare taxes collected during employment only apply to Part A for hospital inpatient coverage, but not for Part B coverage, and late enrollment penalties apply.6Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022

If you do not enroll in Medicare Part B when you are first eligible:6Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022

  • Your Part B monthly premium will increase by 10% for each 12-month period that you are not enrolled.
  • You will pay a higher premium for the remainder of your life.

Medicare Part D Late Enrollment Penalty

The Medicare prescription drug coverage program was added in 2003 to help aging seniors and people with Social Security Disability Insurance afford their prescription medications. Even though a Part D insurance plan is optional private insurance, CMS created a penalty structure to encourage people to join when first eligible.7Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

If you do not join a Medicare Part D plan when you are first eligible:7Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

  • Your Part D monthly premium will increase by 1% of the national base beneficiary premium average multiplied by the number of months you were not enrolled.
  • In most cases, you will pay the premium for as long as you have Part D coverage.
  • If you receive the Extra Help benefit from Social Security you will not pay the penalty.

Do Late Enrollment Penalties Apply When Employed?

Many of us work well past our 65th birthday, and Medicare takes this into account. If you are employed and your employer provides creditable health insurance, you can delay enrollment. However, it is not safe to assume that 100% of your employer coverage is creditable. It is highly advisable to call Medicare and confirm that you are in compliance.9Medicare.gov, ”Working past 65”, Accessed January 11, 2022

When your current employment group health plan coverage ends you have the option to use COBRA to bridge the gap between your employer’s group coverage and Medicare. You’ll need to add Part B within eight months of the earliest of either the end of your employment or the end of your group health coverage.9Medicare.gov, ”Working past 65”, Accessed January 11, 2022

If you have a Health Savings Account (HSA) with a high deductible health plan through your or your spouse’s current employment, you may be eligible for a Special Enrollment Period (SEP). In this case, to avoid a tax penalty you must stop contributing to your HSA at least 6 months prior to enrolling in Medicare.9Medicare.gov, ”Working past 65”, Accessed January 11, 2022

How to Sign Up for Medicare

Your Medicare enrollment may or may not be automatic. Some people need to sign up for Medicare, and others don’t.

If you are still working and do not want to sign up for Medicare coverage at age 65, you need to call Social Security to let them know. This will help you avoid automatic Medicare enrollment.

If you receive Social Security, Railroad Retirement Board (RRB), or other federal retirement benefits four or more months prior to your 65th birthday, Social Security will enroll you in Part A and B automatically. SSA will send you a notice prior to your eligibility date.4CMS.gov, ”Original Medicare (Part A and B) Eligibility and Enrollment”, Accessed January 11, 2022

If you are not automatically enrolled, you must use the SSA website to start your enrollment or visit your local Social Security office.  If you get enrolled during your IEP, when your coverage begins will depend on the month you enroll.

If you enroll in Medicare Parts A and B:2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

  1. During the 3-month period before your birthday, coverage begins on the first day of the month you turn 65 (if your birthday is on the 1st, coverage begins the prior month).
  2. During your birthday month, coverage starts on the first day of the next month.
  3. During one of the three months after your birthday month, coverage starts on the first day of the month after you enrolled.

If you plan to stay in Original Medicare and want prescription drug coverage, you can enroll in a Part D plan as soon as you enroll in Medicare Part A and/or Medicare Part B.2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

RELATED: Why Medicare Advantage Plans are Bad

Alternatively, you can join a Medicare Advantage plan that includes a Medicare Part D plan. To enroll in Medicare Advantage you must first enroll in Medicare Part A and B2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022. They will not enroll you until you have your Medicare number, which is printed on your Medicare card. In the past, it was the same as your Social Security number, but this is no longer the case. For security, your Medicare number is unique to you.10Medicare.gov, ”Your Medicare Card”, Accessed January 11, 2022

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If You Missed Your IEP, Here’s What You Need To Do

Your IEP is the ideal time to enroll in Medicare. If you missed it, or if you delayed enrollment because you have creditable through your employer, your next option is the Medicare General Election Period (GEP), often referred to as the general enrollment period.2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

GEP is a three-month period from January through March of each year. No matter when you enroll during GEP, your coverage start date will be July 1st.2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

If you miss the first GEP after your IEP, you will not be allowed to enroll until the following January. That means you will be without coverage for well over a year and you will incur late enrollment penalties.2Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

Call 1-855-728-0510 (TTY 711) for plan assistance.

If you qualify for Medicare and don't know where to start, MedicareEnrollment.com, an independent HealthCompare insurance broker, has licensed insurance agents who can help you with your Medicare enrollment options, Mon-Fri, 8am-9pm , SAT 8am-8pm EST.

Not Enrolling On Time is a Costly Mistake

It’s important to get enrolled in Medicare during your IEP so you can begin taking advantage of the benefits you’re earned. One of those benefits is your free “Welcome to Medicare” visit. This doctor visit includes a review of your medical and social history related to your health and education and counseling related to preventive services, including:11Medicare.gov, ”‘Welcome to Medicare’ preventive visit”, Accessed January 11, 2022

  • Certain screenings, flu, and pneumococcal shots, and referrals for other care, if needed.
  • Height, weight, and blood pressure measurements.
  • A calculation of your body mass index.
  • A simple vision test.
  • A review of your potential risk for depression and your level of safety.
  • An offer to talk with you about creating advance directives.
  • A written plan letting you know which screenings, shots, and other preventive services you need.

You pay nothing for the “Welcome to Medicare” preventive visit if your doctor or other qualified healthcare provider accepts Medicare-assignment. On this visit, the Part B deductible doesn’t apply.11Medicare.gov, ”‘Welcome to Medicare’ preventive visit”, Accessed January 11, 2022

As we outlined above, gaps in Medicare coverage can be costly. In some cases, penalties can be waived, but this, too, can be very costly in the time and frustration spent trying to get a waiver approved. If you need a waiver, start on this Medicare.gov page.

Need Help Deciding?

Don’t struggle with the decision. Our Medicare insurance experts are here to help. Give us a call at 1-855-728-0510 (TTY 711) and one of our licensed agents will be glad to answer all of your questions. with no obligation.


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