Medicare and Working Past 65 in 2026

Many of these individuals rely on employer group health plans and delay Medicare enrollment, sometimes unknowingly exposing themselves to lifelong penalties or denied claims.

The rollout of major policy reforms under the Inflation Reduction Act and other federal legislation makes 2026 an important year for Medicare beneficiaries working beyond 65.

When Medicare Becomes Primary or Secondary

For individuals working past age 65, how Medicare works with employer coverage depends on the size of the employer.

This coordination determines which plan pays medical claims first, meaning that it acts as the primary payer.

Failing to enroll correctly can result in denied claims, higher out-of-pocket costs, or permanent late-enrollment penalties.

Here's how it works:

◆ Employers with 20 or more employees: The employer's group health plan pays first, and Medicare is the secondary payer.

In this case, your client can delay enrolling in the Medicare Part B outpatient hospitalization and physician services plan without incurring a penalty because the client's employer coverage meets Medicare's requirements.

◆ Employers with fewer than 20 employees: Medicare pays first.

If your client does not enroll in Part B when first eligible, your client's employer plan may only pay as the secondary payer, or not at all, which could leave your client responsible for most medical costs.

Knowing who pays first is essential to avoid gaps in coverage and unexpected expenses.

Delaying Medicare Part B Without a Penalty

If your client is still working and has health insurance through the client's active employment or a spouse's active employment, the client can delay enrolling in Medicare Part B without facing a late-enrollment penalty.

Once that employer coverage ends, the client is eligible for an eight-month special enrollment period, or SEP, to sign up for Part B.

However, this flexibility does not apply if your client is covered under COBRA or a retiree health plan.

Medicare does not consider these types of coverage creditable for delaying Part B, meaning that the client could face a permanent late-enrollment penalty if the client waits to enroll based on having COBRA or retiree coverage.

SEP Reforms Help In 2026

Thanks to the 2021 Consolidated Appropriations Act, Medicare now offers new SEPs for situations such as natural disasters, incarceration, or employer enrollment errors.

These options can help workers avoid lifetime penalties if they missed their original enrollment period due to factors beyond their control.

Documentation Is Essential

To enroll in Medicare Part B during a special enrollment period without a late penalty, your client must provide proof of creditable coverage.

This includes:

◆ A completed CMS-L564 form, signed by the client's employer, verifying the client's group health plan coverage.

◆ A Medicare Part B application, also known as a form CMS-40B.

Your client should keep copies of all submitted forms and related documents.

This paperwork is necessary to prove that the client had continuous employer coverage and to avoid any potential enrollment penalties.

Prescription Drug Coverage and 2026 Part D Caps

For a client to put off signing up for Medicare Part D prescription drug coverage due to having employer coverage, the employer's drug coverage must be "creditable." That means that the employer's drug coverage must pay at least as much as Medicare Part D pays.

If not, and the client delays enrolling in Part D coverage, the client may face a late-enrollment penalty.

Why this matters: Beginning in 2026, under the Inflation Reduction Act, Medicare caps annual out-of-pocket drug costs at $2,100.

Non-creditable coverage can trigger late-enrollment penalties if individuals delay signing up for Part D.

As a result, the new cap not only reduces the financial burden but also underscores the importance of evaluating employer coverage to avoid long-term penalties and maximize Medicare benefits.

Avoiding Gaps and Redundancy

Improper coordination between Medicare and employer coverage can result in costly consequences.

Common issues include:

◆ Denied claims, particularly when Medicare should have been the primary payer.

◆ Duplicate coverage costs from overlapping employer and Medicare plans.

◆ Late-enrollment penalties for Medicare Part B or Part D.

◆ Unexpected out-of-pocket expenses for services not fully covered by either plan.

Reviewing a client's coverage and helping a client understand how the plans work together can help prevent these avoidable problems.

Telehealth Access Ending in Early 2026

Congress responded to the COVID-19 pandemic by giving Medicare enrollees access to extra coverage for telehealth services.

Expanded Medicare telehealth flexibilities, which currently allow beneficiaries to receive care from home without geographic restrictions, are set to expire on Jan. 30, 2026, unless Congress extends them.

After that, Medicare is expected to return to the pre-pandemic telehealth rules.

The pre-pandemic rules limited Medicare telehealth coverage to rural areas and required patients to be at specific locations to receive covered services.

Workers and retirees who rely on virtual care may want to review their coverage options before the deadline.

Why Your Client Should Work With a Medicare Advisor

Given the evolving Medicare rules, consulting with a Medicare advisor is strongly recommended.

If you're a Medicare advisor yourself, that's fortunate.

If Medicare is outside your area of expertise, you should consider forming a referral relationship with someone who understands that program well.

A qualified advisor can:

◆ Analyze your client's current employer and Medicare options.

◆ Advise the client on appropriate enrollment timing and documentation.

◆ Help your client avoid penalties and coverage interruptions.

◆ Ensure that your client is prepared for Medicare drug and telehealth policy changes.

For individuals working past 65, 2026 represents a key moment to revisit Medicare decisions.

With changes to prescription drug caps, new SEP options, and telehealth coverage sunsets, proper planning can make all the difference.

It's never been more vital to understand coverage coordination rules, enrollment windows and documentation requirements.

Working with an experienced advisor can also help ensure smooth transitions and uninterrupted care.

Tricia Blazier is director of health care insurance services at Allsup.