Working past 65 is increasingly common. The decision about what to do with Medicare when you have employer health coverage sounds straightforward. It is not. The answer depends on a specific number — 20 — and a specific word: active. Get either one wrong, and you are either paying two premiums for coverage you do not need, or exposed to lifetime penalties for coverage you thought you had.
There is a further HSA complication that catches many people by surprise. When you apply for Medicare after age 65, coverage is automatically backdated by up to six months — though never earlier than your 65th birthday. This retroactive start date means that if you were contributing to your HSA during those six months, those contributions are now classified as "excess" because you were technically enrolled in Medicare during that period. Excess HSA contributions are subject to a 6% excise tax per year they remain in the account. To avoid this, financial planning guidance generally calls for ceasing all HSA contributions at least six months — ideally seven — before your planned Medicare application date or retirement date. If you plan to retire in March, stop HSA contributions by September of the prior year at the latest. **The Special Enrollment Period: How to Exit Employer Coverage Without a Penalty** If you legitimately delay Medicare because you have primary coverage through a large employer, a Special Enrollment Period (SEP) protects you when that coverage ends. The SEP is an eight-month window that begins the month after your employment ends or your Group Health Plan coverage ends, whichever comes first. During the SEP, you can enroll in Medicare Parts A and B without penalty, regardless of how long you delayed. The SEP exists precisely for people in the situation described in this article — still working, still covered, legitimately waiting. But the SEP requires documentation. The Social Security Administration needs proof that your coverage was based on active employment. Two forms are involved: Form What It Is Who Completes It CMS-40B Application for enrollment in Part You (the applicant) B CMS-L564 Request for employment information Your employer's HR or — attests that coverage was benefits department based on active work If you had multiple employers since turning 65, you may need a CMS-L564 from each one. A documented gap in coverage — even one month — can trigger the penalty. The precision of this paperwork matters.
If you let the eight-month SEP window lapse without enrolling, the General Enrollment Period (GEP) is your only remaining option. The GEP runs from January 1 through March 31 each year, with coverage beginning the first of the following month. A person who misses the SEP in September would need to wait until the next January-to-March window, potentially adding a gap of four to six months, and would owe a lifetime Part B penalty for the months of uncovered delay.
Employee counts matter enough that it is worth verifying before making any decisions. HR departments can provide this information directly. For people who work at companies near the threshold, or whose employer is part of a larger corporate structure, the relevant number is the total employee count for the entity maintaining the health plan — not the individual office or location. The bottom line for working-past-65 planning: confirm your employer's size, confirm the HSA implications, and build your SEP timeline into the retirement planning calendar at least 12 months before your target retirement date. **Get Medicare timing guidance for your specific employment situation — Retirement Shield Insurance Partner.**
If your employer has fewer than 20 employees, Medicare becomes your|You can continue contributing to your HSA past age 65 — but only if|Part A interaction is also highly asymmetric — most people assume|Part A enrollment is accurate per IRS guidance. Six-month retroactive