If you’re approaching Medicare eligibility but you’re still working and on a group health plan, you may be wondering how that employee group plan works with Medicare. Fortunately, there are ways for your employer health insurance to work hand-in-hand with Medicare coverage.
Can You Have Medicare and Employer Insurance?
You can have Medicare benefits and employer-sponsored insurance at the same time. This is referred to as having “dual coverage.” How these two types of insurance work together depends on the size of your employer and whether Medicare is considered the primary or secondary payer.
The size of how many people are on payroll will determine whether or not you should consider going on Medicare while you’re still working.
Small Employers (Fewer Than 20 Employees)
If you’re employed by a smaller company and only 19 people or fewer are on the payroll, Medicare will be the first payor, and the group plan will be second. So, when you have a medical bill, Medicare will pay the main portion of the bill and then send the rest of the balance to your employer plan.
When you enroll in Medicare, you are responsible for paying a Part B monthly premium. Therefore, in addition to paying your group plan premiums (out of your paycheck), you’ll also have to pay Medicare premiums. In this case, since Medicare is in the first payor position, it’s typically best to drop your group plan and enroll in Medicare.
If you are in a small group plan, the company has the right to make you enroll in Medicare. If they do this, it’s best to drop the group plan and go on Medicare.
Large Employers (20 or more employees)
If there are 20 or more people on payroll, the group plan will be in the first payor position, and Medicare will be in the second payor position. In other words, if you’re in a group of 20+ people and you have a medical claim, the bill will be sent to your group plan health insurance first. The group plan will cover their portion, and if there’s still a balance, they’ll send it to Medicare for payment consideration.
This means if you’re in a group plan with 20 or more people on the payroll, you may want to stay on the group plan health insurance and wait until you retire to go on Medicare coverage. This is because when you enroll in Medicare Parts A and B, you’ll have to start paying the monthly Part B premium. If you’re already paying two or three hundred dollars per month (out of your paycheck) for your group plan, it probably isn’t worth it to go on Medicare since they will only pay second to your group plan.
Keep in mind that if you’re in a group of 20 or more, you do not have to go on Medicare. Often, people are pressured by H.R. departments and even coworkers to enroll in Medicare when they turn 65, but the truth is, if you’re covered by a 20+ people on payroll and you like the price and the coverage, you don’t need to get on Medicare yet.
Medicare Options When Covered By an Employer Group Plan
Fortunately, you have Medicare options if you’re still covered by an employee group plan. Keep in mind that all of this information applies to spouses covered by a group plan. So, if your spouse is the employee and you’re simply covered by the plan, your Medicare options are still the same.
1. Do Nothing
As long as you’re in a group of 20 or more people, the employer cannot make you enroll in Medicare. If you’re still working at 65 and are covered by a large group plan, you do not have to enroll in Medicare. If someone tells you differently, don’t listen to them; they are mistaken.
If, however, you are in a group of 19 or less, your employer can make you enroll in Medicare. Since Medicare pays first for small group insureds, some employers make their employees enroll in Medicare at 65.
2. Enroll in Medicare Part A Only
If you’re still working at 65 and are covered by a group plan, the second option you have is to enroll in Medicare Part A only. Medicare Part A is for inpatient services (e.g., hospital stays, inpatient surgeries, etc.). If you’re working for a company with 20+ people on the payroll and enroll in Medicare Part A only, Medicare will pay second (after your group plan) for your inpatient care.
There is one group of people who can not enroll in Medicare Part A or B if they’re still working. This group of people is made up of 20 or more people who are contributing to a health savings account (HSA). When you enroll in any form of Medicare (A only or both A and B), you can no longer contribute to your HSA. If you’re going to keep working and you have an HSA, it’s smart to keep contributing to that future medical expense fund since it is a tax-advantaged account. Because of this, if you have an HSA, it’s best to wait to enroll in Medicare until you retire.
3. Enroll in A & B and Stay in the Group Plan
The third option you have while still working is to enroll in Medicare Parts A and B and stay in your group plan. Medicare A is free for anyone who has paid into the Medicare tax system for at least 40 quarters (or 10 years of work). Part B, on the other hand, comes with a monthly premium, as mentioned earlier.
Sometimes, it doesn’t make sense to pay for your group plan while also paying the part B premiums (especially if you’re in a large group since Medicare pays second). Further, once you enroll in Medicare Part B, your six-month Medigap open enrollment period begins, meaning if you ever want to purchase a Supplemental plan, you’ll need to do so within the next six months, or you may not medically qualify for one in the future.
That’s why, if you’re unhappy with your group plan and want to enroll in Medicare A and B while you’re still working, we typically advise people to drop the group plan, qualify for Medicare, and purchase a Supplemental plan.
If, however, you don’t like your group plan coverage and it makes sense financially, you can enroll in Medicare A and B while staying in your group plan.
4. Enroll in A & B and Drop the Group Plan
Finally, if you’re still working at 65, you can enroll in Medicare Parts A and B and drop your employer plan. If you’re not happy with your group health plan coverage—whether due to high deductibles, copayments, or monthly premiums—this option may be worth considering. However, be sure to evaluate how it might affect others on your plan. If you have a younger spouse or children covered under your group plan, dropping it could leave them without coverage.
Additionally, if you take expensive, brand-name medications, staying on your group plan may be the better choice. While Medicare does cover prescription drugs, Medicare drug plans have different cost stages, including an out-of-pocket spending threshold. In 2025, once you reach $2,000 in out-of-pocket drug costs, you won’t owe anything for the rest of the year—this is called the catastrophic stage.
However, group plans do not have this catastrophic stage and don’t include the same out-of-pocket spending limits as Medicare drug plans. If you rely on costly medications, carefully compare your group plan benefits with Medicare coverage before making the switch.
We understand how difficult making the right Medicare decisions can be. To take the next step, watch our full course here or schedule a free one-on-one call with a certified Medicare School Guide who can answer your questions, compare plan options, and even help you enroll.
FAQs
Can I Have Medicare and Employer Insurance at the Same Time?
Yes, you can have Medicare and employer insurance, and they can work together to cover your healthcare costs.
Is Medicare or My Employer Plan the Primary Payer?
This depends on the size of the company. If your employer has fewer than 20 employees, Medicare is primary. If your employer has 20 or more employees, your employer insurance is primary.
Do I Need Medicare Part B If I Have Employer Insurance?
Not necessarily. If your employer insurance is considered creditable coverage, you may delay Part B without penalty. However, verify this with your employer.
Can My Employer Force Me to Enroll in Medicare When I Turn 65?
No, employers cannot force you to enroll in Medicare, but they might adjust your benefits if Medicare becomes your primary insurer.
Will Having Both Medicare and Employer Coverage Reduce My Out-of-Pocket Costs?
Yes, having both can reduce costs. The primary insurer pays first, and the secondary insurer may cover some or all of the remaining expenses.
Can I Drop My Employer Group Plan and Only Use Medicare?
Yes, you can choose to rely solely on medical benefits. However, compare coverage and costs before making a decision.
What If I’m Covered By a Spouse’s Employer Group Plan?
The same rules apply here. Medical benefits may be primary or secondary, depending on the employer’s size.
Does Having Medicare and Employer Insurance Affect Prescription Drug Coverage?
You should verify if your employer’s plan meets Medicare’s standards for drug coverage under Part D to avoid late penalties for Part D.