Medicare and Employment: What Happens to Your Coverage When You Retire

The transition from employer health coverage to Medicare at retirement is one of the most consequential insurance decisions you'll make. Timing and coordination are critical to avoiding penalties and coverage gaps.

When Medicare Enrollment Starts. Most people are eligible for Medicare at 65. Your Initial Enrollment Period is a 7-month window around your 65th birthday—three months before, the month of, and three months after. Missing this window without qualifying coverage can result in late enrollment penalties.

When Employer Coverage Delays Medicare. If you or your spouse has employer-sponsored coverage through active employment (not COBRA or retiree coverage), you have a Special Enrollment Period when that coverage ends. You can delay Medicare without penalty as long as qualifying employer coverage remains in force.

COBRA Is Not Qualifying Coverage. COBRA continuation coverage and retiree health benefits do not count as qualifying coverage for purposes of delaying Medicare enrollment. If you rely on COBRA at 65, you should generally enroll in Medicare during your Initial Enrollment Period.

Coordination Between Employer Coverage and Medicare. When you have both employer coverage and Medicare, one plan is primary and the other is secondary. For active employees at companies with 20 or more employees, employer coverage is primary. For retirees, Medicare is generally primary. Understanding which pays first affects how your claims are processed.

Part B Enrollment Timing. Part B has a monthly premium and late enrollment penalties that accrue for each 12-month period you were eligible but didn't enroll without qualifying coverage. These penalties are permanent and add to your Part B premium for life. Enrolling at the right time prevents this ongoing additional cost.