Do I need Part B if I’m still working? Who pays first at 65

Do I need Part B if I’m still working at 65?

Medicare Part B is optional at 65 if your employer is large enough. If your employer size is 20 or more employees, you can usually delay it without a late penalty. Under 20, Medicare pays first and you generally need to enroll at 65.

Employer size decides this, not whether you are still working.

Where you fit:

• Large employer (20+): Sections 2 and 4 show what delaying saves you.
• Small employer, or you own one: Section 3 is the one that costs money to skip.
• You contribute to an HSA: Read Section 6 before you sign up for anything, including Part A.

ℹ️ Financial Disclaimer: This article is general financial education, not personalized advice on insurance, tax, lending, credit, or debt relief. Medicare rules and amounts change every year, and coordination with an employer plan depends on facts specific to you. Before acting, consult a fiduciary financial advisor, a CPA for tax questions, a qualified attorney where legal rights are involved, or your free State Health Insurance Assistance Program counselor.

The 20-employee rule, and how it’s actually counted

The threshold comes from the Medicare Secondary Payer provisions in Section 1862(b) of the Social Security Act. It turns on one number.

Source: Centers for Medicare & Medicaid Services, Medicare Secondary Payer coordination rules.

What counts as 20 or more employees

🔍 How It Works: This is not a headcount taken on your birthday. Under 42 CFR § 411.170(a)(2)(i), an employer qualifies if it had 20 or more employees on each working day in each of 20 or more calendar weeks during the current calendar year or the preceding one. A firm sitting at 18 today may still be over the line.

If you’re covered by a spouse’s employer

The rule follows the employer providing the coverage, not the person reaching 65. If your spouse works somewhere with 400 employees and covers you, you are on the large-employer side.

Ask HR this exact question

✅ Action Step: Email your benefits administrator: “For Medicare Secondary Payer purposes, did this company have 20 or more employees on each working day in 20 or more calendar weeks during this calendar year or last, and do we participate in a multi-employer plan?” Get the answer in writing. Asking how many people work there produces a confident answer to a different question.

You can read the coordination rules in CMS’s own breakdown of which payer comes first.

If your employer has fewer than 20 employees

At a small employer, the order reverses. Medicare becomes the primary payer on your 65th birthday, and your group plan is built to pay second.

That matters because a secondary plan calculates its share as though Medicare already paid its part. Skip Part B and nothing filled that first position.

⚠️ Costly Mistake: Assuming a small-group plan covers you the same way it did at 64. It does not, and the shortfall is not a fee you can appeal later. Ask your plan administrator directly: “Does this plan pay as secondary to Medicare for employees 65 and over, and what does it pay if I am not enrolled in Part B?”

One boundary worth knowing. If you qualify for Medicare through disability rather than age, the threshold is 100 employees, not 20.

What Part B costs in 2026 if you take it anyway

📊 Data Point: The 2026 standard Part B premium is $202.90 a month, with a $283 annual deductible — up from $185.00 a month in 2025. Source: CMS 2026 Medicare Parts A & B premiums and deductibles, released 14 November 2025.

Run that out and the first year costs $2,434.80 in premiums, plus the $283 deductible if you use enough care to meet it. That is roughly $2,718 layered on top of whatever your employer already deducts.

When your income raises the premium

Above $109,000 in modified adjusted gross income for an individual, or $218,000 filing jointly, CMS adds an income-related adjustment on top of the standard premium. It is a surcharge on the same coverage, not a different product, and the income tiers that trigger it run in bands.

Part B is one line among several. The parent guide breaks down all five Medicare bills you actually pay.

What the late enrollment penalty actually costs

Delay Part B without qualifying coverage and Medicare adds a late enrollment penalty to your premium for as long as you hold Part B.

🔍 How It Works: The penalty is 10% of the standard premium for each full 12-month period you could have enrolled and did not. Medicare’s own published example: someone 24 months late owes a 20% penalty, bringing their 2026 premium to $243.50 a month. Source: Medicare.gov, avoiding late enrollment penalties.

Isolate the penalty and it is $40.60 a month, or $487.20 a year, at 2026 rates. That figure is an illustration at this year’s premium, not a projection, because the penalty is a percentage and re-indexes whenever the standard premium moves.

A qualifying Special Enrollment Period removes it entirely. The full mechanics sit in our guide to how the 10% Part B surcharge is calculated.

If you contribute to an HSA, Part A matters too

Enrolling in any part of Medicare, including premium-free Part A, sets your HSA contribution limit to zero from that month forward. IRS Publication 969 states it plainly, and it applies to periods of retroactive coverage.

Why Part A can reach backwards

CMS starts Part A the month you turn 65 if you file within six months of that month. File later and Part A is made retroactive by six months. Contributions during those backdated months become excess, carrying a 6% excise tax for each year they stay in the account.

The 2026 limits are $4,400 self-only and $8,750 for family coverage, plus $1,000 catch-up at 55 and over, per IRS Revenue Procedure 2025-19. Our guide to how HSAs are taxed against a 401(k) covers the wider picture.

✅ Action Step: Ask a CPA or enrolled agent: “Given my Medicare enrollment date and any retroactive coverage, what is my prorated HSA contribution limit this tax year, and do I have an excess contribution to correct?” Prorating a limit and correcting an excess both depend on facts this article cannot see.

The coverage that doesn’t count, and the eight-month clock

Social Security is specific about what counts as coverage based on current employment. COBRA does not. Neither does retiree coverage, VA health coverage, or a Marketplace plan.

⚠️ Costly Mistake: Treating COBRA as an extension of your Part B delay. Your eight-month Special Enrollment Period starts when employment ends or group coverage ends, whichever comes first, and it runs whether or not you elect COBRA. See Social Security’s list of coverage that does not qualify.

Two clocks run, not one. Part B gets eight months. A Medicare Advantage or drug plan gets two full months after the month your coverage ends, per Medicare.gov.

File Form CMS-40B with Form CMS-L564, which your employer completes. Free, non-commercial help is available from your State Health Insurance Assistance Program, and our guide covers when to sign up for Medicare in sequence.

Common questions about Part B while you’re still working

What to do before your 65th birthday

Send your benefits administrator the question in Section 2 and ask for the reply in writing. That single answer tells you which branch you are on, and every other decision here follows from it.

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