Medicare and employer coverage, when to delay Part B

The single factor that decides this is the size of the employer providing your coverage. The rule is about which insurance pays first, the primary payer. 20 or more employees: the group health plan generally pays primary and Medicare pays secondary, so you can usually delay Part B without penalty while you keep the employer coverage. Fewer than 20 employees: Medicare generally becomes the primary payer at 65, whether or not you have enrolled, so if you delayed Part B, the bills Medicare would have paid as primary may go unpaid.

So the first question is not "do I like my coverage," it is "how many people work here." If you are not sure how Medicare coordinates with your specific plan, the plan's benefits administrator can tell you whether it pays primary or secondary, and that answer settles the decision.

Part A is premium-free for most people, since it is paid for through the Medicare taxes you contributed during your working years. Because it costs nothing, most people enroll in Part A at 65 even while keeping employer coverage, and it can pick up some hospital costs as secondary coverage.

There is one important exception: if you contribute to a Health Savings Account, enrolling in any part of Medicare, including free Part A, ends your ability to contribute to the HSA. If you are still funding an HSA and want to keep doing so, that is a real reason to delay even Part A, and it needs to be timed carefully because Part A enrollment can be backdated. If an HSA is in the picture, plan this deliberately rather than enroll on autopilot.

The reason delaying Part B at a large employer is safe is the Special Enrollment Period. If you had qualifying employer coverage based on current employment, you get a window to enroll in Part B without penalty when that employment or coverage ends, generally up to eight months. Active, current employer coverage keeps your window open; the SEP begins when the job or the coverage ends. To avoid a gap, the move is to enroll in Part B in the month before your employer coverage ends so the new coverage starts seamlessly.

A few situations look like protection but are not, and they are where people get hurt. COBRA does not count, it is not active employer coverage for Medicare's purposes, so if you are relying on it at 65 your enrollment window may already be running. Retiree coverage does not count either, coverage from a former employer is not current-employment coverage. And a spouse's plan follows the spouse's employer: you can sometimes delay based on a working spouse's coverage, but the 20-employee test applies to their employer, and the protected window is tied to their employment ending, not yours. If any of these describes your situation, confirm your specific case before you decide to wait.