Navigating Medicare can be complex under any circumstances, but it becomes especially tricky when you or your spouse opts to work past 65. With more and more people deciding to do just that, there are a lot of questions and misconceptions related to this topic. If you’re approaching Medicare age and plan to continue working, be aware of these five common mistakes that beneficiaries make:

1. Enrolling in Medicare Due to Fear of a Late Enrollment Penalty (LEP)

Whether or not you should enroll in Medicare when you turn 65 really comes down to the number of employees in the company. Generally speaking, if the company has fewer than 20 employees, you need to enroll in Medicare Part A and Part B. In this instance, Medicare becomes the primary payer and the group plan becomes secondary (if you choose to keep it).

If the employer has greater than 20 employees, you can choose to delay Medicare Part A and/or B until a later date. In this case, the group health plan will be the primary payer and Medicare will be the secondary payer.

However, there is another consideration: creditable coverage. Creditable coverage means your employer’s prescription drug coverage is considered at least as good as Medicare Part D. In other words, it offers equal or better Rx benefits, so you can safely delay enrolling in Medicare drug coverage (Part D) without facing a penalty later.

As long as you are actively working for a large employer (> 20 employees) and have creditable Rx coverage through that current employment (either your own or your spouse’s), you can safely delay Medicare A and/or B to a later date. When you retire, you will have a Special Enrollment Period in which you can pick up Medicare Part A and/or B with NO Late Enrollment Penalty (LEP).

For more on this topic, visit Medicare and Group Insurance: A Guide for Employees Approaching 65.

Note: Creditable coverage is coverage that you receive through current employment. If you have COBRA or retiree coverage, or if your employer gives you an amount of money to purchase health insurance, you do NOT have health insurance based on “current employment”. Therefore, these types of coverage are generally NOT considered “creditable”.

Truman’s Tip:

Creditable status is more important than ever! With recent changes to Medicare Part D under the Inflation Reduction Act, some employer-sponsored drug plans may no longer meet the creditable coverage standard. You should receive a Creditable Coverage Notice from your employer or plan provider each year by October 15. This document confirms whether your current prescription coverage meets Medicare’s standard and you’ll want to hang onto it! You may need it if you choose to enroll in Medicare Part D at a later date.

2. Not Enrolling in Part A

Most beneficiaries get Medicare Part A “premium free”. If you or your spouse has worked for 40 quarters (10+ years) then you qualify for this benefit and you will not pay a premium for Part A . If you fall into this category and will receive Part A premium-free, it’s generally recommended that you take it even if you continue on your group health plan. If the employer has 20+ employees, your group health plan will be the primary payer and Medicare would be secondary. So basically, Medicare Part A acts as a secondary insurance for inpatient hospital services.

There is one caveat: an HSA. If you would like to continue contributing to an HSA, do NOT take Medicare Part A. See below for more!

3. Contributing to an HSA Once Enrolled in Medicare

You cannot have any part of Medicare and an HSA. If you enroll in Medicare A and/or B and continue contributing to the HSA, the IRS may consider contributions that are made after enrolling in Medicare to be "excess" and charge a 6% penalty tax on those funds when they are withdrawn. If you would like to continue making contributions to your HSA, you should delay both Part A and Part B until you (or your spouse) stop working or lose that employer coverage. You will NOT pay a penalty for delaying Medicare, as long as you enroll within 8 months of losing your coverage.

Note: If you delay Medicare because you wish to continue contributing to your HSA, your Medicare Part A effective date will be backdated six months upon Medicare enrollment, so you should stop contributions to your HSA six months prior to retiring and enrolling in Medicare. For more information and an example of this, visit Medicare and Group Insurance: A Guide for Employees Approaching 65.

4. Assuming Group Health Plan is Better than Medicare

Some Medicare-eligible individuals will stay on their Employer Group Health Plan (EGHP) simply because they already have it and they figure the coverage is better than Medicare. That is not necessarily the case! If you have the option to stay on your EGHP (generally because you or your spouse’s employer has greater than 20 employees), you should compare your current coverage to Medicare. In some cases, Medicare is a better and more affordable fit. You’ll want to compare and consider the premium, deductible, copayment, coinsurance, maximum out of pocket, and prescription drug coverage in order to determine what is best suited for your needs.

5. Not Delaying Part B

If you are already collecting Social Security for 4+ months, you will be automatically enrolled into Medicare Part A and Part B. You’ll receive your “Welcome to Medicare” packet about three months before your 65th birthday. Because you are collecting Social Security benefits, you are required to keep Part A. However, if you would like to delay Part B, you will need to follow the instructions in your “Welcome to Medicare” packet to do so. Delaying Part B allows you to save the cost of your Part B premium ($185 for most beneficiaries in 2025). It also allows you to postpone your one-time “Medigap open enrollment period” until a later time. You will NOT pay a penalty for delaying Medicare, as long as you enroll within 8 months of losing your coverage or stopping work (whichever happens first). You’ll want to plan ahead and enroll in Part B at least a month before you stop working or your employer coverage ends, so you don’t have a gap in coverage.

Summary

Working past 65 brings unique Medicare decisions and understanding your options is key to avoiding unnecessary costs or coverage gaps. Our free guide, Medicare and Group Insurance: A Guide for Employees Approaching 65, breaks down the essentials to help you make confident, informed choices. For personalized support, connect with a licensed Medicare broker at Care Compass. Schedule your complimentary 'Care at No Cost' consultation today—your peace of mind is just a conversation away!

Care Compass is an independent insurance agency that helps seniors navigate the complexities of Medicare and other Senior Products. Our goal is to empower Medicare-eligible individuals to make educated and informed decisions about their healthcare. Our services are offered at NO COST to you. Care Compass is proudly owned and operated in Duncansville, Pennsylvania and we serve the residents of Blair County and the surrounding region. If you need Medicare assistance near Altoona, PA, contact us today!

Working Past 65? Five Costly Mistakes Medicare Beneficiaries Make