Turning 65 Soon and Still Working? What to Look Out for Before You Delay Medicare

If you’re turning 65 in the next year or so and you plan to keep working, Medicare may not be as automatic as you think. The good news is you may be able to delay parts of Medicare without a penalty. The not-so-good news? There are a lot of moving pieces, and assuming the wrong thing at 64 can cost you for the rest of your life.

Before I dive in, a quick note: I’m a licensed insurance agent in 12 states, but since I’m based in California, the majority of my clients are right here in CA. Some of the rules and product availability in California are a little different than in most states, and I’ll point those out along the way.

Here’s what to look out for at 64 if you plan to keep working past 65 and delay Medicare.

1. Is your employer coverage actually “creditable”?

The first question is whether your group plan counts as creditable coverage in the eyes of Medicare. Creditable coverage is essentially coverage Medicare considers as good as — or better than — Medicare itself. This matters for two reasons:

• It determines whether you can delay Part B without a late enrollment penalty later.
• It determines whether you can delay Part D prescription drug coverage without a penalty.

Your HR department or benefits manager should be able to confirm this in writing. Don’t guess — ask for it.

2. How many employees does your company have?

This is one of the most overlooked rules. The size of your employer changes how Medicare interacts with your group plan:

• 20 or more employees: Your group plan is generally the primary payer, and Medicare can usually be delayed safely.
• Fewer than 20 employees: Medicare typically becomes the primary payer at 65, even if you’re still on the group plan. If you don’t enroll in Part B, you could end up with major gaps in coverage and big out-of-pocket costs.

If you work for a smaller employer, delaying Part B can be a serious mistake. Always confirm with HR or your benefits manager which payer is primary.

3. Should you sign up for Part A?

Most people qualify for premium-free Part A, so signing up at 65 seems like a no-brainer. And in many cases, it is.

But there’s an important exception: if you’re contributing to a Health Savings Account (HSA). Once you enroll in any part of Medicare — including Part A — you can no longer contribute to an HSA. If you and your employer are still putting money into your HSA, enrolling in Part A early could cost you that benefit.

If you’re HSA-eligible and want to keep contributing, you may want to delay Part A as well. Just be aware: if you’re already collecting Social Security, you’ll automatically be enrolled in Part A and cannot opt out without giving up Social Security benefits.

4. Should you delay Part B?

If your employer coverage is creditable and you work for a company with 20+ employees, you generally can delay Part B without penalty. When you eventually retire or lose group coverage, you’ll qualify for a Special Enrollment Period to sign up for Part B without a late fee.

If those conditions aren’t met, delaying Part B can trigger a 10% lifetime penalty for every full 12 months you go without it — and that penalty stays with you for as long as you have Part B.

5. Compare your group plan to Medicare side by side

Even if you can delay Medicare, that doesn’t always mean you should. It’s worth comparing both options before deciding. Look at:

• Monthly premium
• Deductible
• Max out-of-pocket
• Whether you’ve already hit your max out-of-pocket this year
• Network and provider access
• Prescription drug coverage

Sometimes group coverage wins. Sometimes Medicare plus a supplement is more convenient and less expensive. The only way to know is to put them next to each other.

6. Even if your group plan wins, there are still major exposures

This is the part most people don’t realize. Even great group coverage leaves real financial gaps when something serious happens. The big three I see hit working clients hardest are:

• Cancer
• Heart attack
• Stroke

And on top of that, recovery care — the rehab, home health, time off work, and out-of-pocket costs that come after a major event — is rarely fully covered by any group plan. These are the hidden gaps no one talks about until it’s too late.

7. We build “umbrella” protection packages around your group plan

This is where I help clients most. If you’re staying on group coverage, we tailor an umbrella — a protection package built around your existing plan — designed to fill those exposures. These umbrellas are flexible and customized to your needs, lifestyle, and budget. No two clients get the exact same plan, because no two situations are the same.

Depending on what fits, an umbrella can include coverage for cancer, heart attack, and stroke, hospital indemnity, recovery and rehabilitation care, and income protection during treatment. The goal isn’t to replace your group plan. It’s to make sure that if the worst happens, your savings, retirement accounts, and assets stay protected — instead of getting drained by the costs your group plan doesn’t pick up.

8. A few California-specific things to know

Because most of my clients are here in CA, this is where I have to flag a few things that are different from other states:

• Umbrellas must be purchased before your 65th birthday. In California, several of these protection products have to be in place before you turn 65. If you wait until after your birthday, you lose the chance to add them. This is one of the biggest reasons I encourage clients to plan at 64, not 65.
• Some coverages, like Recovery Care, aren’t available in California. The good news is we have a workaround. We use other tools and product combinations to recreate similar protection so California clients aren’t left exposed just because the standard product isn’t sold here.
• Plans and rules can vary by state. Since I’m licensed in 12 states, if you’re working in CA but plan to retire elsewhere — or vice versa — we can plan around both.

9. Best next step

If you’re 64 and planning to keep working past 65, here’s the short checklist:

1. Confirm with HR or your benefits manager whether your coverage is creditable.
2. Find out how many employees your company has so you know who pays primary.
3. Decide whether to enroll in Part A based on HSA contributions.
4. Decide whether to delay Part B based on creditable coverage and employer size.
5. Compare your group plan to Medicare on premium, deductible, and max out-of-pocket.
6. Identify the gaps your group plan doesn’t cover — especially the big three and recovery care.
7. If you’re in California, lock in your umbrella before your 65th birthday.

If you’re approaching 65 and plan to keep working, let’s review your group coverage together and build a plan that protects you from the gaps most people don’t see coming. I’m licensed in 12 states with most of my clients here in California, and I’ll walk you through your options step by step.

Bonus tip: keep your paperwork

One more thing I’d add from real-world experience: keep copies of the letters that prove your coverage history.

Specifically, save:

The letter from your employer or insurer stating your group plan is considered creditable coverage. This is what you need to prove to Medicare that you didn’t go without drug coverage during your working years.

The letter you receive when you retire or your group coverage ends, showing the dates you were covered. Make sure it shows from when to when you were covered, not just an end date.

Why this matters: I’ve had clients who were on Medicare for a couple of years — with no issues — and then out of nowhere got hit with a late enrollment penalty. By that point, they no longer had the proof, and their old employer was hard to track down to provide the necessary documentation. It’s a frustrating fight to be in years after the fact.

Save those letters in a folder — paper or digital — and back them up. Your future self will thank you.