How Does Medicare Work with Employer Insurance?

Estimated read time: ~8 minutes

Summary: You may have the option of having Medicare and employer insurance at the same time. Before making decisions about your health insurance, it’s important to understand Medicare’s rules and how Medicare and employer insurance work together.

If you’re 65 or older, you qualify for Medicare, a government-run health insurance plan covering 68.5 million Americans.1 If you’re 65 or older and still working, you may have access to both an employer health insurance plan and Medicare.

You could find benefits from having both Medicare and employer health insurance coverage, or you could decide it’s not worthwhile. First, it’s a good idea to get familiar with Medicare’s rules. Then, you can compare the costs and coverage of each plan, so you can make the best choice for your financial and healthcare goals.

Can you have Medicare and employer insurance at the same time?

Typically, yes, you can have both Medicare and work insurance at the same time. This includes the various parts of Medicare as well as Medicare supplement insurance. You may also have the option of deferring your enrollment in Medicare if you are covered by an employer plan.

Medicare Part A offers hospital coverage without any additional premium for most Medicare-eligible adults. Medicare Part B offers coverage for medical services like doctor visits and requires a premium. Medicare Part D provides prescription drug coverage and also requires a premium.

Should you enroll in Medicare if you have employer insurance?

Whether or not you should consider Medicare when you’re still working and have employer coverage often depends on the size of your employer, the quality of your current coverage and your budget. If you understand the rules and make an informed decision, you may move forward with greater confidence knowing your health insurance needs are adequately managed.

Medicare Part A: Should you enroll even if you’re still working?

In most cases, you can sign up for Medicare Part A even if you’re covered by an employer health plan. Medicare Part A doesn’t charge any premiums for most adults 65 and older, and comes with valuable coverage for inpatient care, such as hospitals, skilled nursing facility care, hospice care and home health care. You can enroll in Medicare Part A online in just a few minutes, or you can make an appointment to enroll through a local Social Security office.

Part A is premium-free as long as you or your spouse has paid Medicare taxes for at least 10 years. If you don’t qualify for free coverage, you will have a monthly premium that’s based on how long Medicare taxes were paid (either $285 or $518 in 2025).²

Medicare Part B: Should you enroll if you have employer insurance?

Medicare Part B covers regular doctor visits and other outpatient care. If you work for a large employer (more than 20 employees) and are satisfied with your employer coverage, you may want to keep it. You generally have two options. You can choose to have both employer insurance and Medicare Part B coverage at the same time. Or, you can choose to delay your enrollment in Medicare Part B and continue with just your employer coverage. In this case, after your employer coverage ends, you’ll have a special eight-enrollment period to sign up for Part B. If you miss this enrollment period, you may face late enrollment penalties.

When making this decision, consider the cost of Medicare compared to your employer’s plan, your ability to pay for both and what each plan covers. The standard premium for Medicare Part B is $185 for 2025.³

If you work for a small employer (less than 20 employees), you’ll likely be required to sign up for Medicare Part A and Part B when you become eligible for Medicare. If you don’t sign up, you may incur late penalties or have limited coverage, as your employer-based coverage might not pay for health services if you don’t have both Part A and Part B.⁴ If you’re required to sign up, you should sign up during your Initial Enrollment Period to avoid penalties. That period starts three months before you turn 65 and ends three months after the month you turn 65.

Medicare Part D: Should you enroll along with employer insurance?

Medicare Part D covers your prescription medications, including many recommended vaccines. Again, it’s worth reviewing the medication coverage from your employer’s plan and the costs of each medication when deciding whether to also enroll in Part D.

Medicare Part D costs and coverage vary by plan,⁵ so it’s a good idea to spend time researching plans based on the medications you take or expect to need in the next year.

When your employer prescription drug coverage is at least as good as Medicare’s, it is considered creditable coverage. If you have creditable coverage, you have the option of delaying your enrollment in Medicare Part D penalty-free. Once your employer health insurance ends, you will have a special eight-month enrollment period to sign up for Medicare Part D. If you enroll in Part D after this period, you will face a late enrollment penalty which is permanently added to your monthly Medicare Part D premium.⁶

How does Medicare work with employer insurance?

If you have Medicare and employer health insurance at the same time, your employer’s plan will likely serve as your primary coverage, meaning it pays for medical expenses first and Medicare steps in as a backup. This coordination of benefits can be a little tricky to manage, but overall, you may come out ahead financially in some scenarios.

The U.S. Centers for Medicare and Medicaid Services has specific rules for how primary and secondary payer status work. Your employer’s plan is almost always the primary payer, but you’ll find a few exceptions.

Pros and cons of having both Medicare and employer insurance

Keep the following in mind if you’re considering having both Medicare and employer insurance:

Pros

• Broader coverage and lower out-of-pocket risk: With multiple insurance policies in place, you have more comprehensive coverage over an extensive range of potential medical care needs.
• More flexible coverage: If you leave your job or your employer’s coverage changes, you still have reliable baseline benefits from Medicare.

Cons

• Double premiums: When you have both Medicare and employer-sponsored coverage, you’ll typically pay two sets of premiums, which can be costly.
• Overlapping coverage: Even though you have both types of insurance, you may not see double the benefits. Some coverage may overlap, and in those cases, you might receive very little or even no additional benefits.

Is Medicare coverage primary or secondary to employer insurance?

If you have full medical coverage from your employer’s plan, Medicare coverage is generally considered secondary coverage. This means your employer’s insurance pays for most medical costs, and Medicare steps in to pay if you exceed your primary plan’s limits.⁷

There are some exceptions though. For example, if your employer has fewer than 20 employees, Medicare is the primary payer and your employer plan is the secondary payer. If you are on COBRA, Medicare is the primary payer. And if you’re covered by a spouse’s employer-based insurance or have end-stage renal disease, the primary payer may be either plan, depending on your specific situation.

How to switch from employer health insurance to Medicare

To make the switch to Medicare, you must sign up during one of the enrollment periods. There are four different enrollment periods, including:

• Initial enrollment: This is a seven-month window that includes the three months before you turn 65, the month you turn 65 and three months after you turn 65. If you keep employer coverage, you can opt out of your Initial Enrollment Period without penalties.
• Special enrollment: If you miss or opt out of your initial enrollment period, you might be able to take advantage of a special enrollment period as long as you qualify. Qualifying events can include a loss of current coverage (e.g., employer coverage), moving to another state or a contract change in your Medicare plan. If you lose coverage from your job or your spouse’s job, you’ll typically have an eight-month enrollment period for Medicare coverage.
• Annual enrollment: Also known as open enrollment, this period generally occurs from October 15th through December 7th and allows eligible people to sign up or make changes to their Medicare plans even outside of an initial or special enrollment window.

Concluding thoughts on Medicare and employer insurance

Understanding your Medicare and employer health insurance options, healthcare needs and budget can help you make an informed decision about your healthcare coverage. You may also be required to enroll in Medicare, depending on the size of your employer and what coverage they offer.

If you’re on the fence about what options are available to you, consult with a benefits coordinator at your employer or visit our Medicare Advice Center for guidance on which Medicare plan may best fit your needs.

Medicare and employer coverage FAQs

1. Is Medicare primary or secondary to employer coverage?

If you are working full-time for a company with 20 or more employees, your employer’s health insurance plan is likely the primary coverage, even if you have Medicare.

2. Should I delay Medicare if I have good job-based coverage?

If you are happy with your employer’s health plan, you’re not required to sign up for Medicare. Comparing the costs and benefits of both options can guide you to the best decision for your finances and healthcare needs. You can also have employer insurance and Medicare simultaneously, if you prefer.

3. What happens if I don’t enroll in Medicare at 65 while working?

If you don’t enroll in Medicare and work past age 65, you can continue using your employer’s health insurance plan (if available). However, you may encounter financial penalties if you don’t enroll in Medicare and don’t have another qualified insurance policy in place. Once your employer insurance ends, you will have a special eight-month enrollment period to sign up for Medicare before penalties begin.

4. How does Medicare work if my spouse is still working and I’m covered under their insurance?

If your spouse works at a company with 20 or more employees, the employer plan can remain your primary health insurance, or work in conjunction with Medicare, similar to if it were your own employer’s health insurance. If in doubt, check with the employer’s HR department and Medicare to be certain.

Sources

¹ Data.cms.gov. Web page: Medicare Monthly Enrollment. Retrieved June 09, 2025, from https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment

² Medicare.gov. Web page: Costs. Retrieved June 09, 2025, from https://www.medicare.gov/basics/costs/medicare-costs

³ U.S. Railroad Retirement Board. Web page: 2025 Medicare Part B Premiums and Deductibles Will Increase. Retrieved June 09, 2025, from https://www.rrb.gov/Newsroom/NewsReleases/MedicarePartBPremium

⁴ CMS.gov. Web page: 5 things you need to know about signing up for Medicare. Retrieved July 7, 2025, from https://www.cms.gov/training-education/find-provider-type/employers-unions/top-five-medicare-enrollment

⁵ Medicare.gov. Web page: How much does Medicare drug coverage cost? Retrieved June 09, 2025, from https://www.medicare.gov/health-drug-plans/part-d/basics/costs

⁶ Medicare. Web page: Partner tip sheet. Retrieved July 7, 2025, from https://www.cms.gov/outreach-and-education/outreach/partnerships/downloads/11222-p.pdf

⁷ Medicare.gov. Web page: How Medicare works with other insurance. Retrieved June 09, 2025, from https://www.medicare.gov/health-drug-plans/coordination

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