Turning 65 is a big milestone, and one question that often comes up is whether you need to sign up for Medicare if you’re still working and have health insurance through your job. The answer really depends on your specific situation, like the size of your employer and how your current health plan stacks up with Medicare.

Here what you need to know:

Employer Size: A Big Factor

One of the key things to check is how many employees you company has covered under its group health insurance plan:

• If your company has 20 or more employees covered under their group health plan: Your employer’s health insurance will continue as your primary coverage, and Medicare will be secondary. In this case, you can delay signing up for Medicare Part B (which covers things like doctor visits) without a penalty as long as you're still covered by your job’s plan. It’s usually a good idea to sign up for Medicare Part A (hospital coverage), since it’s free for most people and might help cover some costs not included in your employer’s plan.
• If your company has fewer than 20 employees covered under their group health plan: Here, Medicare becomes your primary insurance, and your employer’s plan is secondary. You’ll need to sign up for both Medicare Part A and Part B when you turn 65 to avoid any penalties or gaps in coverage.

A Few Words on COBRA and Medicare

If you’re covered under COBRA instead of active employer coverage, things work differently. COBRA allows you to keep your employer's health plan for a limited time (usually 18-36 months) after leaving your job, but it doesn't count as active employer coverage for Medicare purposes.

Here’s how COBRA and Medicare interact:

• Before you turn 65: If you're on COBRA when you hit 65, you'll still need to sign up for Medicare when you become eligible. COBRA will not prevent Medicare late penalties. In fact, once you qualify for Medicare, COBRA becomes secondary, and Medicare becomes your primary insurance.
• If you're already 65 and on COBRA: You should sign up for Medicare Part B as soon as you can, because COBRA coverage doesn’t let you delay enrolling in Medicare without facing late penalties. After enrolling, Medicare will be your primary insurance, and COBRA will only cover costs that Medicare doesn’t.

COBRA is not considered active employer coverage, so it won’t protect you from Medicare penalties. Make sure you sign up for Medicare Part B when you turn 65, or if you’re already on COBRA, don’t delay enrolling.

Compare Your Costs and Coverage

Even with your employer’s insurance, Medicare might still make sense, depending on your healthcare needs and costs. Here are a few things to consider:

• Premiums: Medicare Part B has a monthly premium, and your employer’s insurance probably has one too. It’s worth comparing what you’re paying now with what you’d pay under Medicare.
• Out-of-pocket costs: Look at how much you pay for deductibles, copays, and coinsurance with your current plan and see how that compares to Medicare’s costs.
• Prescription drugs: If your employer’s health plan has good prescription drug coverage, you can delay signing up for Medicare Part D (which covers medications). But if the coverage isn’t considered “credible,” you could face a penalty for waiting too long to enroll in Part D.

What If You Want to Delay Medicare?

If you stick with your employer’s plan and decide to wait on Medicare Part B, no worries—you can avoid late penalties as long as you enroll during a Special Enrollment Period. This allows you to sign up for Medicare without extra costs for up to eight months after you stop working or lose your employer coverage.

Do You Have an HSA?

If you’re contributing to a Health Savings Account (HSA) through your job, there’s one important thing to note: you can’t keep adding money to your HSA once you enroll in Medicare. However, the good news is that you can still use the money already in your HSA to pay for eligible healthcare expenses, including Medicare premiums and deductibles.

Medicare Advantage and Your Job’s Plan

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurers. However, if you’re still working and have health insurance through your employer, it’s usually best to wait on signing up for a Medicare Advantage plan. Most Medicare Advantage plans don’t mix well with employer-sponsored health coverage, so it’s something to consider when you’re ready to retire.

Whether or not to sign up for Medicare when you hit 65 really depends on your work situation and healthcare needs. If your company is on the larger side, you can likely hold off on enrolling in Part B. But if your employer is smaller, you’ll need to sign up for both Part A and Part B to make sure you’re fully covered.

It’s always a good idea to talk to your HR department to see how your current insurance works with Medicare, and you might also want to speak with a financial advisor to help figure out the best option for your situation.

In the end, it’s about finding the right balance between your current insurance and Medicare so you get the best coverage with the lowest costs.