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Life Health > Health Insurance > Medicare Planning

Your 65-Year-Old Client Is Still Working. Do They Need to Enroll in Medicare?

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What You Need to Know

  • If your client is covered by an employer health insurance plan at age 65, the size of the employer is key in determining whether they need to enroll in Medicare.
  • HSA contributions are not allowed once your client is enrolled in Medicare.
  • There are specific Medicare enrollment periods that must be adhered to, depending on your client's situation.

As your clients approach age 65, you undoubtedly get a number of questions about enrolling in Medicare. Many of these questions are about how to go about it, deadlines for enrolling and whether they should consider a Medicare Advantage plan or similar supplemental plan.

For clients who are working at age 65, there are a number of additional issues and questions to consider.

Basic Medicare Rules

If your client is not receiving Social Security benefits when they reach age 65, they will not automatically be enrolled in Medicare. They will need to make a decision as to enroll now or wait.

Whether your client needs to enroll at age 65 will depend upon the nature of your client’s medical coverage, including coverage through a spouse’s employer. If your client is required to enroll and they don’t do so in a timely fashion, there could be penalties involved, some of which are permanent.

The normal enrollment period if required to enroll at age 65 is seven months, beginning with the three-month period prior to the month in which your client turns 65; the month of their birthday; and the three months following.

If your client is already collecting income from Social Security, they will automatically be enrolled in a Part A plan.

Employers With 20 or More Employees

If your client is covered by health insurance through a company with 20 or more employees, they are not required to enroll in Medicare. The same rules apply if your client is covered under a plan offered by their spouse’s employer.

Whether your client decides to enroll in Medicare is up to them, not the employer. The rules require that an employer with 20 or more employees offer the employee or their eligible spouse the same coverage offered to all other employees.

Your client can decide between these options:

  • Stay with the employer coverage and delay Medicare enrollment
  • Opt out of the employer coverage and go solely with Medicare
  • Continue the employer coverage and enroll in Medicare as well

In some cases, people might consider signing up for Part A (assuming they have met all eligibility requirements), as it is free. In this case, the client’s employer coverage will be primary and Medicare Part A secondary. A client still making pretax contributions to a health savings account (HSA) may opt not to sign up for Part A. More on this below.

In the case of Part B, clients can also enroll if still covered by an employer plan, but again, the employer coverage will be primary if the employer has 20 or more employees. Additionally, Part B requires the payment of a premium.

Taking Part B while covered by an employer policy might hinder your client’s ability to purchase a Medigap supplemental policy once they leave their employer and Medicare becomes their primary coverage. Insurers cannot deny Medigap coverage to anyone on Part B regardless of their health if they sign up for a policy within six months of enrolling in Part B.

Having employer coverage while on Part B does not extend this six-month window.

Upon losing coverage from this employer, your Medicare-eligible client will have an eight-month special enrollment period to sign up without incurring any penalties.

Employers With Fewer Than 20 Employees

If your client is covered by an employer policy through their own employment or via their spouse and the company has fewer than 20 employees, the Medicare rules are completely different. The most common situation for small companies is that the employer will require your client to enroll in Medicare at age 65. Medicare will then become the primary coverage with the employer’s plan providing secondary coverage.

Your clients working for an employer with fewer than 20 employees or covered by a spouse’s coverage from an employer will want to specifically ask the employer if they are required to enroll in Medicare. If not, it is a good idea to have the employer state this in writing.

In the case of Medigap coverage, signing up for Part B when their employer’s coverage is secondary will not impair your client’s ability to obtain Medigap coverage once they are no longer covered by their employer. They must obtain this coverage within 63 days of the end of their employer’s coverage in order to maintain full federal protections that require insurers to cover them regardless of any health issues.

COBRA or Other Health Coverage

If your client is on COBRA coverage from a former employer of theirs or their spouse, or some other type of health insurance coverage, they must enroll in Medicare when eligible at age 65 or before, if disabled.

If your client is no longer covered by an employer plan and is on COBRA coverage, Medicare will become the primary when they become eligible. Retiree health coverage works the same way if it’s your client’s main insurance coverage. This is the case even if they are working but their health insurance coverage comes from this source.

Failure to enroll during the enrollment period can subject them to applicable penalties and potentially to higher premiums on an ongoing basis.

HSAs and Medicare

Once your client signs up for Medicare Part A or Part B, they are not allowed to contribute to an HSA, nor can they receive contributions from their employer. For clients using their HSA as an addition to their retirement savings, it can make sense to delay signing up for Medicare until their coverage under their employer’s plan or that of their spouse’s employer comes to an end.

For clients enrolling in Part A after reaching age 65, the coverage can be made retroactive for up to six months. You will want to be sure they coordinate ending their HSA contributions prior to the commencement of their retroactive coverage to avoid potential penalties.


Your clients need your guidance on a variety of retirement planning topics as they reach retirement including a retirement withdrawal strategy, when to claim Social Security benefits and enrolling in Medicare benefits.

For those clients who are still employed and covered by employer health insurance at age 65, the issues can become very complex. Your expert guidance is important to them, you will want to be sure to stay up on all of the rules regarding Medicare enrollment on their behalf.

(Image: CMS)


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