Key Takeaways
-
Having both Medicare and employer coverage can provide strong protection, but only if you understand who pays first and how enrollment timing works.
-
Failing to enroll in Medicare at the right time could lead to permanent penalties or loss of coverage, especially if your employer coverage isn’t considered creditable.
Why Medicare and Employer Coverage Can Overlap
As more people work beyond age 65, a growing number are enrolled in both Medicare and employer-sponsored health plans. While this combination can offer broad benefits, it can also create confusion around coordination of benefits, enrollment deadlines, and what happens when you retire.
In 2025, Medicare continues to act as either primary or secondary coverage based on the size of your employer and your work status. Getting this wrong can lead to unnecessary costs and even denied claims.
Who Pays First: Medicare or Your Employer Plan?
Medicare coordination of benefits rules determine which plan pays first:
-
If you’re 65 or older and work for an employer with 20 or more employees, your employer group health plan usually pays first, and Medicare pays second.
-
If you’re 65 or older and work for an employer with fewer than 20 employees, Medicare typically pays first, and your employer plan is secondary.
This rule is critical. If Medicare should be primary and you don’t enroll, your employer plan may not pay anything at all.
Enrollment Timelines You Can’t Afford to Miss
Understanding the right time to enroll in Medicare is essential to protecting your benefits and avoiding penalties.
Initial Enrollment Period (IEP)
You have a 7-month window to enroll in Medicare around your 65th birthday:
-
3 months before your birthday month
-
Your birthday month
-
3 months after
If you’re still working and have group health coverage, you may choose to delay Part B (and Part D), but this depends on whether your coverage is considered creditable.
Special Enrollment Period (SEP)
If you delay enrolling in Medicare because you have creditable employer coverage, you get a Special Enrollment Period when that coverage ends. This SEP lasts 8 months starting from the month after your employer coverage ends or your employment ends, whichever comes first.
Delaying enrollment beyond this window can result in:
-
A 10% Part B late enrollment penalty for each 12-month period you were eligible but didn’t sign up
-
A Part D late enrollment penalty that accumulates monthly
These penalties are usually permanent.
What Counts as Creditable Coverage?
Creditable coverage means your employer health plan is at least as good as Medicare’s coverage. Most large employer plans are considered creditable for both Medicare Part B and Part D, but you should verify with your benefits administrator.
Your employer must provide a notice of creditable coverage each year. Keep this documentation in case Medicare requests proof.
Retiring After 65? You May Need to Act Fast
When you retire after age 65, your employer plan will likely end. That triggers the start of your 8-month Special Enrollment Period for Medicare Part B. But beware:
-
COBRA coverage does not count as creditable coverage for Medicare Part B.
-
Retiree health plans are not active employment-based coverage, so they don’t delay the need for Medicare enrollment.
If you miss your SEP, you may have to wait for the General Enrollment Period (January 1 to March 31), with coverage not starting until July 1, potentially leaving you uninsured for several months.
Medicare Part A: Should You Delay?
Most people get Part A premium-free if they worked and paid Medicare taxes for at least 10 years. For this reason, many choose to enroll in Part A at 65 even if they keep working.
However, if you contribute to a Health Savings Account (HSA), enrolling in any part of Medicare (even Part A) disqualifies you from contributing further. You should stop HSA contributions 6 months before enrolling in Medicare to avoid tax penalties, as Medicare Part A can be retroactive up to 6 months.
How COBRA Coverage Fits In
COBRA allows you to continue your employer plan after leaving a job, but it can be misleading when it comes to Medicare. If you delay enrolling in Medicare while on COBRA:
-
COBRA does not count as active employer coverage
-
You won’t get a Special Enrollment Period when COBRA ends
Medicare should be your primary coverage once you retire, not COBRA. If you miss your SEP and rely on COBRA, your claims could be denied, and you might face penalties.
Prescription Drug Coverage and Part D Penalties
If your employer plan includes creditable prescription drug coverage, you can delay Medicare Part D enrollment. But if it isn’t creditable, the clock starts ticking on your Part D penalty the month after your IEP ends.
You must enroll in a Part D plan within 63 days of losing creditable drug coverage to avoid the late enrollment penalty. The penalty is 1% of the national base premium per month you go without coverage.
How Spousal Coverage Works
If your spouse is still working and you’re covered under their employer plan, the same rules apply. You can delay Medicare Part B without penalty if the employer has 20 or more employees and offers creditable coverage.
However, you should still:
-
Confirm creditable coverage status each year
-
Plan your Medicare enrollment around the end of employment or coverage
You’ll get your own 8-month SEP once your spouse’s coverage ends.
Employer Plans Often Shift After Retirement
Some employers offer retiree health plans, but these plans often change or terminate over time. In many cases:
-
They become secondary to Medicare once you’re eligible
-
They may only cover costs that Medicare doesn’t
-
Prescription drug coverage may not meet creditable standards
Always review these plans with your benefits office to ensure they align with Medicare’s rules and don’t lead to penalties.
Managing Dual Coverage to Your Advantage
Having both Medicare and employer coverage can offer:
-
Lower out-of-pocket costs (due to coordination of benefits)
-
Broader provider networks
-
Greater flexibility in coverage
To make this work smoothly, be sure to:
-
Communicate with both your employer plan and Medicare
-
Keep all notices of creditable coverage
-
Enroll on time based on your work status
If you have employer coverage and enroll in Medicare Part B, your coordination of benefits is automatic. Just notify your plan administrator.
Be Proactive with Medicare and Employment Transitions
Whether you’re still working or planning to retire soon, aligning your Medicare choices with your employer coverage is essential in 2025. Missteps can lead to denied claims, gaps in coverage, or permanent financial penalties.
If you’re unsure how your situation fits into these rules, a licensed agent listed on this website can help you evaluate your options and protect your benefits.
Make Your Coverage Work Together in 2025
Navigating Medicare alongside employer coverage can feel complicated, but knowing the rules puts you in control. From coordination of benefits to enrollment timelines, every detail matters. If you’re turning 65, delaying retirement, or transitioning to Medicare after employer coverage, planning ahead is essential.
To avoid penalties, unexpected costs, and gaps in care, make sure you get personalized help. Reach out to a licensed agent listed on this website for guidance tailored to your work status and Medicare eligibility.
