In short
- Employer with 20 or more employees: the job's plan pays first, and you can delay Part B with no penalty while covered.
- Employer with fewer than 20 employees: Medicare pays first, so the job's plan may pay little unless you have Part B.
- After the job or coverage ends, you have 8 months to sign up for Part B. COBRA and retiree plans don't extend it.
- High earners still working may owe IRMAA: 2026 Part B surcharges start above $109,000 single or $218,000 joint (2024 income).
Employer coverage (current job) vs Medicare at a glance
| Feature | Employer coverage (current job) | Medicare |
|---|---|---|
| Who pays first, employer with 20+ employees | The employer plan | Pays second, if you enroll |
| Who pays first, employer with under 20 employees | Pays second, and may pay little if you skip Part B | Pays first |
| Your monthly cost | Your share of the premium; KFF's 2025 average worker share for single coverage was $1,440 a year | Part B $202.90 in 2026, plus a Medigap or Medicare Advantage plan and drug coverage |
| Income surcharge | None | Part B and Part D IRMAA above $109,000 single or $218,000 joint (2026, on 2024 income) |
| Covers a spouse or dependents | Yes, if the plan offers family coverage | No. Medicare covers only you |
| Prescription drugs | Usually included; your plan must tell you each year if it is creditable | Part D or Medicare Advantage; yearly cap $2,100 in 2026, $2,400 in 2027 |
| Delaying Part B | Allowed with no penalty while you have coverage from a current job | Sign up any time while covered, or within 8 months after the job or coverage ends |
| HSA contributions | Allowed with an HSA-eligible plan | Not allowed once you have Medicare; Part A can backdate up to 6 months |
| Medigap open enrollment | Does not start while you delay Part B | 6-month window starts the month Part B begins at 65 or older |
| Doctors you can see | The employer plan's network | Original Medicare: any provider that accepts Medicare |
The short answer
If your employer has 20 or more employees and the plan is solid, keeping it and delaying Part B is often the simpler, cheaper choice, as long as you sign up within 8 months of the job ending. If your employer has fewer than 20 employees, or the plan's costs, drug coverage or network are weak, Medicare at 65 usually wins.
More people are working past 65, and many assume they must switch to Medicare on their birthday. Often you don't. But the rules depend on one number most people never think about: how many employees your employer has.
Do you need Medicare at 65 if you still have coverage from work?
It depends on the size of the employer. If you or your spouse are still working and the employer has 20 or more employees, the job's group plan pays first and Medicare pays second. You can delay Part B with no penalty for as long as you have that coverage.
If the employer has fewer than 20 employees, Medicare pays first. The employer plan then pays second, which can mean it pays very little if you never signed up for Part B. In that case, most people should enroll in Parts A and B during their Initial Enrollment Period, the 7 months around their 65th birthday.
| Your situation at 65+ | Who pays first | What most people do |
|---|---|---|
| Current job, 20+ employees | Employer plan | Keep the plan, consider delaying Part B |
| Current job, under 20 employees | Medicare | Sign up for Parts A and B at 65 |
| Small employer in a multi-employer plan with a 20+ member | Employer plan | Treated like a large employer |
| Retiree plan or COBRA | Medicare | Sign up for Parts A and B |
Ask your benefits office in writing how its plan works with Medicare. The details on working past 65 go deeper.
How do the costs compare in 2026?
Staying on a good employer plan often costs you less, because your employer pays most of the premium. KFF's 2025 survey found the average single-coverage premium was $9,325 a year, but the average worker paid only $1,440 of it.
The Medicare side, for a 65-year-old in Lincoln, adds up like this:
| Medicare cost (2026 unless noted) | Monthly | Yearly |
|---|---|---|
| Part B standard premium | $202.90 | $2,434.80 |
| Medigap Plan G, Medicare.gov estimates for age 65 in ZIP 68508 (checked October 2, 2026) | About $137 to $311 at the low end of each company's range | About $1,640 to $3,730 |
| Part B deductible (Plan G leaves you this) | $283 | |
| Part D premium (2027 Nebraska plans start at $5.30) | Varies | Varies, plus drug costs up to the $2,100 cap |
Using those estimates, one person on Medicare with Plan G spends roughly $4,400 to $6,500 a year before any drug costs. Compare that with your share of the employer premium plus the plan's deductible and out-of-pocket maximum. If the employer plan has a high deductible, weak drug coverage or a narrow network, the math can flip.
There is one more cost for higher earners. If your 2024 income was above $109,000 single or $218,000 joint, your 2026 Part B premium includes an IRMAA surcharge, starting at $284.10 a month instead of $202.90. Many people still working at 65 are in that range, which is a good reason to keep a solid employer plan while you can.
What happens when you finally retire?
Once the job or the coverage ends, whichever comes first, you have 8 months to sign up for Part B without a penalty. If you sign up while still covered, or within the first full month after coverage ends, you can ask to delay your Part B start up to 3 months so there is no gap.
COBRA, retiree coverage and VA coverage do not count as current job coverage and do not extend that window. See COBRA vs Medicare for why that trips people up.
Who should keep employer coverage?
Keeping the job's plan usually fits when:
- The employer has 20 or more employees.
- Your share of the premium is modest and the deductible is manageable.
- Your doctors are in network and your medications are covered well.
- You cover a spouse or dependents who would otherwise need their own plan.
- You are contributing to an HSA and want to keep doing it.
Who should switch to Medicare at 65?
Medicare at 65 usually fits when:
- The employer has fewer than 20 employees, so Medicare pays first anyway.
- The employer plan has a high deductible or costly drug coverage.
- Your share of the premium, or the cost to cover you and a spouse, is high.
- Your income is low enough that you may qualify for help, such as a Medicare Savings Program or Extra Help.
What mistakes do people make with employer coverage at 65?
The most expensive mistake is assuming a small employer's plan will keep paying first. If Medicare should have paid first and you skipped Part B, you can end up with large unpaid bills.
Other common mistakes:
- Contributing to an HSA after Part A starts. Part A can backdate up to 6 months if you sign up after 65. Medicare advises stopping HSA contributions 6 months before you apply. See HSAs and Medicare.
- Joining a Medicare plan without asking HR. Medicare warns that signing up for other coverage could cost you your employer coverage, and you may not get it back.
- Not keeping proof of coverage. When you sign up for Part B later, Social Security may ask you to show you had coverage from a current job.
- Forgetting the spouse. Medicare covers only you. Settle a younger spouse's coverage first.
Our turning 65 checklist puts the dates in order.
Who can help you check how your plan works with Medicare?
Start with your employer's benefits office. For Medicare questions, Medicare.gov and 1-800-MEDICARE (1-800-633-4227) are available 24 hours a day, 7 days a week (TTY 1-877-486-2048). Nebraska SHIP (formerly SHIIP) offers unbiased counseling at 1-800-234-7119. Our page on SHIP and local help explains who does what.
If you want the employer plan and the Medicare options compared side by side, talk to me. My help costs you nothing.
Frequently asked questions
Not always. If you have health coverage from your own or your spouse's current job and the employer has 20 or more employees, you can delay Part B without a penalty. If the employer has fewer than 20 employees, Medicare pays first, so you generally need Parts A and B at 65 to avoid large gaps. Always ask the employer's benefits office how its plan works with Medicare.
Many people do, because most people pay no Part A premium. The big exception is anyone contributing to a Health Savings Account. You cannot contribute to an HSA once you have Medicare, and Part A can be backdated up to 6 months when you sign up after 65. If you are putting money into an HSA, plan your Part A start date carefully.
It decides who pays first when you are 65 or older and covered by a current job. If the employer has 20 or more employees, the group plan pays first and Medicare pays second. If it has fewer than 20, Medicare pays first. A small employer that is part of a multi-employer plan where at least one employer has 20 or more employees is treated like a large employer.
Yes. If you have both, one pays first and the other may pay some of what is left, based on the 20-employee rule. Some people at large employers add Part B as secondary coverage. Keep in mind that starting Part B also starts your one-time 6-month Medigap Open Enrollment Period, so if you plan to buy a Medigap policy later, that timing matters.
If your spouse is on your employer plan and under 65, leaving the plan can leave them without coverage. Medicare covers only you. Options for a younger spouse include staying on your plan if you keep working, COBRA after the job ends, a plan through their own job, or an ACA Marketplace plan. Settle your spouse's coverage before you drop anything.
You can once you have Medicare, but check with your benefits administrator first. Medicare's handbook warns that signing up for other coverage could make you lose your employer or union health and drug coverage for you and your dependents, and you may not be able to get it back. If your employer drug coverage is creditable, you can wait on Part D without a penalty.
Sources
- Medicare.gov: Medicare & You 2027 (CMS Product No. 10050) (opens in a new tab)
- Medicare.gov: Who pays first (opens in a new tab)
- CMS: 2026 Medicare Parts A and B premiums and deductibles (including IRMAA) (opens in a new tab)
- KFF: 2025 Employer Health Benefits Survey (opens in a new tab)
- IRS Publication 969: Health Savings Accounts (opens in a new tab)
- Medicare.gov: Find a Medigap policy (opens in a new tab)
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. 1-800-MEDICARE (1-800-633-4227) is available 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.
