Working Past 65 – Do You Need Medicare Part B?

Maybe. It mostly comes down to one number: how many people work for your employer.

If your employer has 20 or more employees, and you're covered through that job, you can usually wait on Part B with no penalty. If it's fewer than 20, Medicare usually pays first, and you'll likely need Part B at 65.

That's the headline. Now let's make sure you get the details right, because this is where expensive mistakes happen.

The mental model: who pays first?

When you have two kinds of coverage, one pays first. That's the "primary" payer. The other pays second, if anything is left.

Your whole Part B decision hangs on that question. Who pays first?

• Employer has 20 or more employees: Your job-based group plan pays first. Medicare pays second.
• Employer has fewer than 20 employees: Medicare pays first. Your group plan pays second.

If Medicare is supposed to pay first and you don't have Part B, there's nothing to pay first. Your group plan may only pay its smaller, second share. That can leave you with big bills.

The analogy: the relay race

Picture a relay race. The first runner has to start, or the second runner never gets the baton.

With a big employer, your group plan runs first. Medicare can sit on the bench, and that's fine.

With a small employer, Medicare runs first. If you skipped Part B, nobody runs that first leg. Your group plan is standing there waiting for a baton that never comes.

Step 1: Ask your benefits person two questions

Don't guess. Ask your HR or benefits office:

1. "Does our company count as 20 or more employees for Medicare?"
2. "Does our plan require me to sign up for Part B at 65?"

Some small-employer plans require Part B. Get the answer in writing if you can. Medicare's own guidance says to check with your benefits administrator if your employer has fewer than 20 employees.

Step 2: Decide about Part A

Most people get Part A premium-free. Many folks take Part A at 65 even while working. It can help as secondary coverage for hospital stays.

One big exception: HSAs. If you contribute to a Health Savings Account, signing up for any part of Medicare means you have to stop contributing. And premium-free Part A can be backdated up to 6 months when you sign up after 65. I wrote a whole piece on Medicare and HSAs because it catches so many people.

Step 3: Know your Special Enrollment Period

If you delay Part B because you're covered by a group plan from current work, you get a Special Enrollment Period (SEP). Here's how it works:

• You can sign up any month while you're still covered by that job-based plan.
• Or within 8 months after the job ends or the coverage ends, whichever happens first.

Sign up inside that window and there's no Part B late penalty.

Miss it, and you generally wait for the General Enrollment Period (January 1 to March 31). You could also owe a penalty for as long as you have Part B. I break that math down in my article on the Part B late enrollment penalty.

The COBRA trap

This is the one I'd underline twice.

COBRA doesn't count as coverage from current work. Neither does retiree coverage. Your 8-month clock starts when you stop working, even if you pick up COBRA.

So if you retire, take COBRA for 18 months, and then sign up for Part B? You missed the window. Medicare also warns that once you're eligible but not enrolled, COBRA may only pay a small part of your bills.

Step 4: The paperwork when you retire

When it's time to add Part B, Social Security will want proof you had job-based coverage. That usually means two forms:

• CMS-40B, the application for Part B
• CMS-L564, the employment form your employer fills out to show your group coverage

Start this a month or two before your coverage ends. That way your Part B can start the day your job coverage stops. No gap.

Your drug coverage needs attention too. When your job-based coverage ends, you generally have 2 full months to join a Medicare drug plan or a Medicare Advantage plan. Want to see how drug plans compare? Our Medicare plan finder estimates yearly costs with your actual drug list.

What about my spouse's plan?

Same rules. If you're covered by your spouse's plan from their current job, the size of their employer matters. When your spouse retires, your 8-month window starts too. Plan the move together.

Things I'd do (and never do)

1. I'd confirm my employer's size in writing. 19 vs. 20 employees changes everything.
2. I'd line up Part B to start the day job coverage ends. No gap, no scramble.
3. I'd put my 8-month deadline on the fridge. Seriously. Write the date down.
4. I'd never count COBRA as a reason to wait. It doesn't extend your window.
5. I'd never keep contributing to an HSA after signing up for Medicare. Stop early. Talk to your tax person.

Retiring soon? Let's map it out

We'll build a simple timeline with you: when to sign up, which forms to send, and what drug or supplement coverage to line up so nothing slips.

Call (417) 633-7200 or stop by our Springfield office at 3616 S Campbell Ave. Closer to Kansas City? Our Belton office can help too.

Retire on your terms. Not Medicare's deadline.

— Matt

Frequently asked questions

Do I need Part B if I'm still working at 65?

Is the employer 20 or more employees, and are you covered through your or your spouse's current job? Then you can usually delay Part B without a penalty. With fewer than 20 employees, Medicare usually pays first, so you'll likely need Part B.

How long do I have to sign up for Part B after I retire?

You have 8 months after your job or your job-based coverage ends, whichever comes first. If you sign up within that window, you won't owe a Part B late penalty.

Does COBRA count as employer coverage for Medicare?

Not for your Special Enrollment Period. COBRA and retiree plans aren't coverage based on current work. Your 8-month clock starts when you stop working.

Should I take Part A while I'm still working?

Many people do, since it's usually premium-free. But if you're putting money in an HSA, signing up for Part A means you have to stop contributing. Check with your benefits office and tax advisor first.

What forms do I need to sign up for Part B later?

Usually Form CMS-40B and Form CMS-L564. Your employer completes part of the L564 to confirm your group health coverage.