Working past 65, Medicare, COBRA, and the SEP trap

Not necessarily; whether you need Medicare at 65 while working depends on your employer's size and your coverage.

If you have active health coverage through a job with 20 or more employees, where you or your spouse still work, you can usually delay Part B (medical) without penalty and enroll later through a Special Enrollment Period. If your employer has fewer than 20 employees, Medicare often becomes the primary payer, so signing up at 65 usually makes sense to avoid coverage gaps. Many people still enroll in premium-free Part A (hospital) at 65 even while working, though that choice interacts with health savings accounts.

No, you cannot contribute to a health savings account (HSA) once you have any part of Medicare, including premium-free Part A (hospital).

An HSA is a tax-advantaged account paired with a high-deductible health plan, and IRS rules say enrollment in any Medicare coverage ends your eligibility to make new contributions. This catches many people who keep working past 65, because if you sign up for Social Security, you are usually enrolled in Part A automatically, which stops HSA contributions. You can still use money already in your HSA for qualified expenses; you just cannot add more. People who want to keep contributing sometimes choose to delay both Social Security and Part A while they keep working.

The Special Enrollment Period is a window that lets you enroll in Medicare after 65 without a late penalty if you delayed because you had active employer coverage.

It applies when you or your spouse worked and had qualifying coverage through a job, generally one with 20 or more employees. Once that employment or coverage ends, whichever comes first, you get 8 months to sign up for Part B (medical) without a penalty. Acting within that 8-month window matters, because waiting past it can leave you with a coverage gap and a permanent Part B late penalty. Retiree coverage, COBRA, and marketplace plans do not start this Special Enrollment Period.

It depends on the kind of other insurance you have.

If you have active employer coverage through a job with 20 or more employees, where you or your spouse still work, you can usually delay Medicare without penalty and sign up later through a Special Enrollment Period. If your employer has fewer than 20 employees, Medicare often becomes the primary payer, so you typically need to enroll at 65 to avoid gaps. Retiree coverage, COBRA, and marketplace plans generally do not count as active employer coverage, so delaying Medicare with those can trigger a late penalty. The rules turn on whether the coverage is active and the employer's size.

Coverage timing depends on when you apply within your enrollment window.

If you sign up during the three months before your 65th birthday, your Part A and Part B coverage generally start the first day of your birthday month. If you apply during or after your birthday month, your start date can be delayed by a month or more. Once Social Security processes your application, your Medicare card typically arrives by mail within a few weeks, though it can take longer during busy periods. Applying early in your Initial Enrollment Period, the seven-month window around your 65th birthday, is the best way to avoid a gap in coverage.

The Part B late penalty is a permanent surcharge added to your Part B (medical) monthly premium if you delay enrolling without qualifying coverage.

The penalty is 10% of the standard premium for each full 12 months you could have had Part B but did not sign up. Because it is based on full 12-month periods, waiting two full years would add 20%, and so on. The surcharge is permanent, meaning it stays on your premium for as long as you have Part B, not just for a year. You can avoid it by enrolling during your Initial Enrollment Period or by having qualifying coverage, like active employer insurance, that lets you delay.

The Part B penalty adds 10% to your Part B (medical) premium for each full 12 months you could have enrolled but did not.

So one full year late adds 10%, two full years adds 20%, and it keeps climbing with each additional full year of delay. The penalty is calculated as a percentage of the standard premium, which is $202.90 per month in 2026, and the surcharge is permanent: it stays on your premium for as long as you have Part B. Because the base premium can change from year to year, the dollar amount of your penalty can shift too, but the percentage tied to your delay stays the same.

Yes, you can avoid the Part B (medical) penalty by enrolling on time or by having qualifying coverage that lets you delay.

The simplest way is to sign up during your Initial Enrollment Period, the seven-month window around your 65th birthday. If you keep working past 65 and have active employer coverage through a job with 20 or more employees, you can delay Part B without penalty and enroll later using a Special Enrollment Period, which gives you 8 months after that employment or coverage ends, whichever comes first. Watch out: retiree coverage, COBRA, and marketplace plans do not count as qualifying coverage for this purpose, so delaying with those can trigger the penalty.

No, the Part B (medical) penalty is not a one-time fee; it is a permanent surcharge added to your monthly premium.

Once a late penalty applies, it stays on your Part B premium for as long as you have Part B, not just for a single year or a single payment. The penalty equals 10% of the standard premium for each full 12 months you delayed enrolling without qualifying coverage, so the longer the delay, the larger the ongoing surcharge. Because it is permanent and recurring, enrolling on time or keeping qualifying coverage matters well beyond your first year.

AEP stands for the Annual Enrollment Period, the yearly window when anyone with Medicare can make changes to their coverage.

It runs from October 15 to December 7 (2026), and the changes you make take effect January 1 of the following year. During AEP you can join, switch, or drop a Medicare Advantage plan (Part C), join, switch, or drop a Part D prescription drug plan, and move between Original Medicare and Medicare Advantage. This is the main once-a-year opportunity to review your plan against your current doctors, medications, and budget, since plans can change their costs and coverage each year. AEP is different from the Medicare Advantage Open Enrollment Period, which runs January 1 to March 31 (2026) and only lets people already in a Medicare Advantage plan make one switch. If you want to change plans, AEP is usually the time to do it.

The term Medicare Open Enrollment Period is used two ways, so it helps to be specific.

Most often people mean the Annual Enrollment Period (AEP), which runs October 15 to December 7 (2026) and lets anyone with Medicare join, switch, or drop a Medicare Advantage plan (Part C) or a Part D drug plan, with changes effective January 1. Separately, the Medicare Advantage Open Enrollment Period runs January 1 to March 31 (2026) and lets people already enrolled in a Medicare Advantage plan make one change, such as switching to another Medicare Advantage plan or returning to Original Medicare. There is also a Medigap Open Enrollment Period, a six-month window that begins when you are 65 or older and enrolled in Part B, during which you can buy a Medigap (supplement) policy without health-based pricing. Knowing which one you mean determines what you can change.

Yes.

If you are already in a Medicare Advantage plan (Part C, your Medicare benefits through a private plan), the Medicare Advantage Open Enrollment Period lets you make one change between January 1 and March 31 (2026). During this window you can switch to a different Medicare Advantage plan, or leave Medicare Advantage and return to Original Medicare, and if you return to Original Medicare you can also add a Part D drug plan. This window is only for people who already have a Medicare Advantage plan on January 1; it is not a time to switch from Original Medicare into Medicare Advantage. You get one change during this period, and it takes effect the first of the month after the plan receives your request. This is separate from the Annual Enrollment Period, which runs October 15 to December 7 (2026). If you missed making a change during AEP, the January to March window is a second chance for current Medicare Advantage members.