Should You Enroll in Medicare While You’re Still Working?

Turning 65 is a milestone. This is commonly known as the “official” retirement age because you’re finally eligible for Medicare insurance coverage. However, many individuals choose to work well beyond age 65 for a multitude of reasons. If you started saving for retirement late or simply enjoy your work, then Medicare might not be on your radar. If you’re still covered by an employer plan, Medicare might not feel urgent. But skipping or delaying Medicare enrollment without understanding the rules could cost you. Here’s what to know in 2025.

What Are Medicare Parts A and B?

Part A covers inpatient hospital care, skilled nursing facilities, hospice, and some home health services; Part B covers outpatient services such as doctor visits, urgent care, preventative care, and durable medical equipment.

Most people pay $0 per month for Part A (premium-free, based on 10 years of work history paying Medicare taxes). If you don’t qualify, the monthly cost in 2025 is $285 or $518, depending on your or your spouse’s work record. Part B comes with a monthly premium: the standard amount in 2025 is $185 with an annual deductible of $257. Higher-income earners may pay more—up to $628.90 per month when Income-Related Monthly Adjustment Amounts (IRMAA) apply. To qualify for Medicare, you must be a U.S. citizen or a permanent resident who has lived in the country for at least five years.

When do I have to sign up for Medicare?

You can first enroll during a seven-month window: the three months before your 65th birthday, your birthday month, and the three months after.

• Part A: Premium-free for most. If you don’t qualify, delaying could mean paying 10% more for twice the number of years you delayed.

• Part B: If you miss your enrollment window, your monthly premium will increase 10% for each year you delay enrollment, permanently. For example, delaying by two years would add $37 per month (20% of $185), bringing your premium to about $222/month for life.

Part D (prescription coverage) also has a late penalty: 1% of the national base premium ($36.78 in 2025) for each month you delay without creditable coverage. A one-year delay equals a 12% penalty (~$4.41/month), applied permanently.

Special Enrollment Period

If you have employer-sponsored health insurance, you can delay Parts A and/or B without penalty. Once your employment or coverage ends, you enter an 8-month Special Enrollment Period to sign up. You typically won’t face a late penalty if you enroll during a SEP. But note: COBRA coverage does not count as creditable coverage for delaying Medicare. Don’t wait for COBRA to end before enrolling.

Medicare vs. Your employer-sponsored insurance

If you or your spouse is still working after age 65 and has employer-sponsored health insurance, it might not seem logical to enroll in Medicare. But consider that Medicare Part A is free for most citizens and will cover some of your largest medical expenses, such as hospitalization. Even if you decide to maintain private insurance, it’s hard to ignore that Medicare Part A offers attractive incentives.

The downside is that enrolling in Medicare means you are no longer able to contribute to a health savings account.

As for Medicare Part B, there is an exception that will help you avoid penalties if you continue to work and maintain enrollment in your employer’s insurance plan. If you are working for a company with more than 20 employees, you do not need to enroll in Medicare Part B because your employer is the primary insurer (that is, the insurance that pays first on health claims), while Part B will be secondary. In addition, you also have eight months after leaving your job to enroll in Medicare without incurring penalties.

For individuals who work for a company with fewer than 20 employees, enrolling in Medicare Part B should be a priority. In this case, Medicare will be the primary insurer. This is a good thing, as Medicare will likely cover items that your private insurance will not, allowing you to reduce out-of-pocket costs.

When you stop working and are eligible for COBRA coverage, it’s best not to wait until your COBRA coverage ends before enrolling in Medicare. COBRA coverage does not grant you immunity from penalties.

Medicare Advantage and supplements

Beyond Original Medicare (Parts A and B), you have choices:

• Medicare Advantage (Part C): Bundles A and B (and often Part D). These plans may include extras like dental, vision, and hearing. In 2025, out-of-pocket caps are $9,350 in-network or $14,000 combined. More than half of beneficiaries now choose Advantage plans.

• Medigap (supplements): If you stick with Original Medicare, Medigap policies help cover deductibles and coinsurance.

Bottom Line: Should You Enroll in Medicare if You’re Still Working?

The smartest move is to compare your employer plan with Medicare. Look at premiums, deductibles, co-pays, and coverage limits. In many cases, enrolling in Part A (free for most) is a no-brainer, while the decision to enroll in Part B depends on the size of your employer and your personal costs. Above all, don’t ignore enrollment deadlines—late penalties for Part B and Part D are permanent and cumulative. Since Medicare rules are complex and exceptions abound, it’s wise to review your options with a professional before making decisions that affect your health and financial future.

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.