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Scenarios to Consider When Approaching Medicare Eligibility


There are many things to consider when you are nearing Medicare eligibility. Enrollment timelines and requirements can vary depending on many personal factors. If you make the wrong decision, it could cost you lifetime penalties or incomplete coverage.  Here is a list of the most common scenarios that you should consider when you are nearing Medicare eligibility. This includes if you will continue working past 65 or not.

Medicare Enrollment Timelines

Medicare has many different enrollment periods that can vary depending on whether you continue working past 65. If you don’t enroll at the correct time, then you could incur lifetime penalties. You would also go without coverage or limit your plan options until your next enrollment opportunity.

Turning 65? 

If you are turning 65, your enrollment period starts 3 months before your birthday month and ends 3 months after your birthday. During this period, you can enroll in Medicare Part A and Medicare Part B. If you miss this enrollment period, then you will have to wait until January 1 – March 31 to apply and your coverage will not be effective until July 1.  You can incur lifetime penalties for the time you were without coverage.

Medicare and working Past 65  

Will you continue working past 65 and maintain creditable coverage? If so, you can delay Medicare enrollment past your initial enrollment eligibility without a penalty if you maintain creditable coverage under your employer’s group plan. You should still compare your group plan to the various Medicare coverage options to determine which coverage and costs work best for you.  If you continue working but forgo your employer’s group coverage, you will need to enroll in Medicare when you are first eligible to avoid late enrollment penalties.

When you lose creditable coverage through an employer plan, you will have a Special Enrollment Period (SEP) to enroll in Medicare Part A and Medicare Part B. This SEP is an 8-month period that begins the month after the employment ends or the coverage ends, whichever happens first. This SEP has two timelines.

  1. If you choose to enroll in Part B immediately after your credible coverage ends you will have 63 days AFTER that date to enroll in an MAPD or PDP plan.
  1. If you choose to enroll in Part B after 2 months but before 8 months after leaving active employment, then you need to apply for an MAPD plan BEFORE your Part B effective date.

Does your employer have less than 20 employees? If your employer has less than 20 employees, you will still need to enroll in Medicare Part A and Part B even if you keep working and maintain coverage through your group plan. This is because Medicare becomes the primary payer in these situations.

Health Savings Account (HSA) Considerations

Do you contribute to an HSA account? Per IRS guidelines, you cannot make contributions to an HSA account any month that you are enrolled in Medicare, or you will be subject to penalties. You will need to stop contributing to your HSA before you enroll in Medicare. If you continued working past 65 and enroll in Medicare at least 6 months after your original eligibility, then it is extremely important to stop these contributions 6 months before you enroll in Medicare. This is because when you sign up for Medicare, and if you’re already six months beyond your full retirement age, Social Security will give you six months of “back pay” in retirement benefits. This means that your enrollment in Part A will be backdated six months. Visit our post on How Medicare Affects your HSA to find out more about how you can use your HSA to pay for Medicare expenses. You should always speak with your financial advisor before making these decisions.

Income Related Monthly Adjustment Amounts (IRMAA)

Most people will pay the standard premium amount for Medicare Part B. However, if your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA) and have a higher Part B premium. Medicare uses your modified adjusted gross income reported on your IRS tax return from 2 years prior. This means your Part B premium will be based on your adjusted gross income from 2 years prior (Example: 2022 Part B premium is based on 2019 Modified Adjusted Gross Income). Due to this, you should seek the advice of your financial advisor as you near retirement.


Even though COBRA is available after you leave an employer plan, it is not considered “creditable” coverage. When you become eligible for Medicare, COBRA enrollment will not allow you to delay your enrollment into Medicare. If you do delay enrollment because of COBRA, you may incur a lifetime penalty once you do enroll in Medicare.

Should you enroll in Medicare Part A if you work?

Should you enroll in Medicare Part A if you have creditable coverage through your employer or spouse’s group plan? For most people, the answer is likely YES. If you worked a total of 10 years (40 quarters), you can get Medicare Part A without a monthly premium. You can enroll in only Part A to give you extra hospital coverage that is secondary to your group plan. If your company is less than 20 employees, you must enroll in both Medicare Part A and Part B. This is because Medicare is first payer with companies under 20 employees.

Who shouldn’t enroll in Part A when eligible? Remember, you cannot contribute to a Health Savings Account (HSA) and be enrolled in Medicare. If you do, you will pay tax penalties. If you continue working past 65, maintain creditable coverage, and will continue to contribute to your HSA, then you should wait to enroll in Medicare Part A to avoid tax penalties. Always consult your financial advisor before making those decisions.