Medicare's rules for that situation are some of the most confusing — and expensive to get wrong — in the whole program. Take Medicare when you shouldn't and you can blow up your HSA. Skip it when you should have enrolled and you can eat a lifetime penalty plus a coverage gap.
This is the plain-English version of the decision. No plan pitches — just the timing that keeps you out of trouble.
Do you even have to take Medicare at 65 if you're still working?
It depends on the size of your employer, and this is the fork everything hangs on.
| 20 or more employees | Fewer than 20 employees | |
|---|---|---|
| Who pays first | Your group health plan | Medicare |
| Can you delay Part B? | Usually yes, without penalty | Usually no — enroll on time |
| The risk if you guess wrong | Paying a Part B premium you didn't need yet | Your group plan refusing to pay what Medicare would have |
Confirm your employer's size and how their plan coordinates with Medicare before you do anything — get this one fact wrong and every decision after it is wrong too.
How do you delay Part B without a penalty?
Part B carries a monthly premium, so if your active employer coverage is solid, a lot of people delay it while they're still working. The key: you have to be covered by a plan based on current employment — not COBRA, not retiree coverage. Those don't count as active coverage, and relying on them is one of the most common costly mistakes people make.
As long as you have qualifying employer coverage, you get a Special Enrollment Period to pick up Part B later without the lifetime late penalty.
Can you keep contributing to an HSA? (the 6-month lookback)
This one quietly burns people who did everything else right. If you're contributing to a Health Savings Account:
- Once you enroll in Medicare — even just premium-free Part A — you can no longer contribute to an HSA.
- When you enroll, Part A coverage can backdate up to six months (never before your 65th birthday). Any HSA contributions made during that backdated window become excess contributions and get taxed.
The fix: if you plan to keep contributing to your HSA while you work, stop contributions at least six months before you enroll in Medicare or claim Social Security (claiming Social Security auto-enrolls you in Part A). Time it wrong and the IRS wants its cut.
How long do you have to sign up after you leave the job?
When you finally stop working — or your employer coverage ends — a clock starts. You have 8 months to enroll in Part B through your Special Enrollment Period without penalty.
Two traps here:
- COBRA does not extend this window. If you go on COBRA and let the 8 months lapse, you can be hit with the Part B late penalty and forced to wait for a general enrollment period, leaving you with a coverage gap.
- The penalty isn't a one-time slap — it's added to your Part B premium for life, 10% for every 12 months you could have had it but didn't.
Mark the date your employer coverage ends and treat that 8-month window like a deadline that matters, because it does.
What is IRMAA, the high earner's surcharge?
Still working at 65 usually means you're still earning — and higher earners pay more for Medicare. The Income-Related Monthly Adjustment Amount (IRMAA) adds a surcharge to your Part B and Part D premiums based on your income from two years prior.
If you had a high-income year (sold a property, took a big distribution, had a strong business year), it can bump your Medicare cost two years later. If your income has since dropped because of a life change — like retiring — you can appeal it. Plan for the surcharge; don't get ambushed by it.
Is the Part D “donut hole” still around in 2026?
If you remember dreading the Part D coverage gap, good news — it's dead. Under the Inflation Reduction Act, the old donut hole was eliminated and replaced with a hard annual cap. For 2026:
- Your out-of-pocket on covered drugs is capped at $2,100 for the year. Hit it, and covered drugs cost you $0 the rest of the year.
- The deductible can't exceed $615.
- A payment smoothing option lets you spread that out-of-pocket cost across the year in monthly installments instead of a big hit at the pharmacy counter.
The rules changed, so the old advice you'll find online is often wrong. That's exactly why the timing on all of this is worth a real conversation.
The bottom line
Working past 65 isn't a problem — but the Medicare decisions around it are unforgiving if you guess. Confirm your employer size, protect your HSA with the 6-month rule, don't let COBRA fool you about the 8-month window, and plan for IRMAA if you're a high earner.
Free printable: your Medicare timing sheet
Fill in your dates once and keep it with your Medicare paperwork. No email needed. Print it or save it as a PDF.
- How many employees does the company have, for Medicare purposes?
- Does our plan pay first or second once I'm 65?
- Is our drug coverage creditable?
- What date does my coverage end if I retire?
Already on Medicare and reviewing your plan this fall? Use the free Medicare AEP Checklist.
Common questions
Do I have to enroll in Medicare at 65 if I'm still working?
It depends on how many people your employer has. If the employer has 20 or more employees, the group plan stays primary and you can usually delay Part B without a late penalty. If the employer has fewer than 20 employees, Medicare generally becomes primary at 65 and you'll want to enroll on time, or the group plan can decline to pay what Medicare would have covered.
Can I keep contributing to my HSA after I enroll in Medicare?
No. Once you're enrolled in any part of Medicare, including premium-free Part A, you can no longer contribute to a Health Savings Account. Part A can also backdate up to six months when you enroll, so contributions made during that window become excess contributions and get taxed. If you want to keep contributing, stop at least six months before you enroll in Medicare or claim Social Security.
Does COBRA count as employer coverage for delaying Part B?
No. Only coverage based on current employment protects you. COBRA and retiree coverage do not, and relying on them is one of the most expensive mistakes people make. Once your employer coverage ends you have an 8-month Special Enrollment Period to sign up for Part B — COBRA does not extend it.
How much is the Part B late enrollment penalty?
It adds 10% to your Part B premium for every full 12 months you could have enrolled but didn't, and in most cases you pay it for as long as you have Part B. That's why the 8-month window after your employer coverage ends matters so much — missing it can also leave you waiting for a general enrollment period with no coverage in between.
Keep learning
- Free printableMedicare AEP Checklist
Seven things to review during Annual Enrollment, October 15 – December 7, with a free one-page printable.
- Made too much for an ACA subsidy in 2026? A self-employed person's real options
The enhanced subsidies expired and the income cliff is back. Here's the honest playbook for affordable, real coverage.