Leaving Employer Coverage
Retiring, laid off, or dropping off a spouse's plan after 65? The rules here are unforgiving and the deadlines are real. Miss one and you can pay a penalty on every Medicare premium for the rest of your life. Get it right and the switch is straightforward.
Who This Applies To
If you are 65 or older and about to lose coverage tied to a job, this is your situation. It does not matter whether the job was yours or your spouse's.
Retiring After 65
You stayed on the company plan past 65 and are now setting a retirement date. Your Medicare clock starts when the job ends, not when you turn 65.
Laid Off or Bought Out
The decision was not yours and the timeline is short. The same eight-month window applies, and it opens whether or not you take COBRA.
Coming Off a Spouse's Plan
Your husband or wife retired, changed jobs, or moved to Medicare, and the family plan ended. Losing their coverage opens your enrollment window too.
Still Working at 65
You are not leaving yet, but you need to know whether to take Part B now or wait. For most people at a large employer, waiting is fine. At a small one, it is not.
Your Eight-Month Window
When employer coverage ends after 65, you get a Special Enrollment Period for Part B. It is generous, but it starts earlier than most people expect.
The part that catches people: the clock starts at the end of employment, not the end of your last day of coverage or the end of COBRA. If you retire in March and keep COBRA through December, your Part B window has been running since April and closes in November — while you still have COBRA in hand and no idea anything is wrong.
The COBRA Trap
This is the single most expensive misunderstanding we see, and it is entirely avoidable.
COBRA feels like a continuation of your employer plan, so it is reasonable to assume Medicare treats it that way. It does not. For Part B purposes, COBRA is not active employer coverage. Neither is retiree coverage, and neither is severance that keeps your benefits running.
What that means in practice: taking COBRA does not pause your eight-month window, and it does not protect you from the late enrollment penalty. People routinely ride COBRA for its full eighteen months, then apply for Part B and discover they missed their window by ten months, owe a permanent penalty, and cannot enroll until the next General Enrollment Period.
The Part B late penalty is permanent. It adds 10% to your premium for each full year you could have had Part B and did not, and you pay it for as long as you have Medicare. It does not expire.
Does Your Employer Plan Pay First?
The size of the employer decides which coverage is primary, and that changes whether you can safely delay Part B.
20 or More Employees
The group plan pays first and Medicare pays second. You can usually delay Part B without penalty for as long as you keep working and stay on the plan. Many people take premium-free Part A at 65 and leave Part B alone until they retire.
Fewer Than 20 Employees
Medicare pays first and the group plan pays second. If you skip Part B, the employer plan can decline to pay the share Medicare would have covered, leaving you responsible for it. At a small employer you generally need Part B at 65.
Employer size is not always obvious, and the count includes part-time staff and affiliated companies. Confirm it with HR in writing before you decide, and check with us if the answer is unclear.
Before You Drop the Employer Plan
Work through these while you still have the plan and can still reach HR easily.
Get Form CMS-L564 Signed
This is the Request for Employment Information, and your employer completes it. It proves you had creditable coverage and is what unlocks the Special Enrollment Period without a penalty. Chase it down before your last day — HR gets much harder to reach afterwards.
Stop HSA Contributions Early
You cannot contribute to a health savings account once you are on any part of Medicare. Part A can be backdated up to six months when you enroll after 65, so contributions made in that window can become excess and taxable. Stop them at least six months before you apply.
Check Your Drug Coverage
Ask HR whether the plan's prescription coverage is creditable. If it is not, a Part D penalty may already be accruing. The Part D window is only 63 days, far shorter than the eight months for Part B.
Line Up the Start Date
Medicare will not backdate to cover a gap. Aim for Part B to begin the day after the employer plan ends so you are never uninsured, and file the paperwork well ahead of that date.
Decide Supplement or Advantage
Part B alone leaves you exposed to 20% of outpatient costs with no annual cap. You need either a Medicare Supplement or a Medicare Advantage plan alongside it, and the choice is easier to make before you are under deadline pressure.
Use Your Medigap Guarantee
Losing employer coverage triggers a guaranteed issue right for certain Medicare Supplement plans, meaning no health questions and no denial. It lasts 63 days. Outside it, most states let carriers underwrite and turn you down.
Common Questions
Do I have to enroll in Medicare at 65 if I am still working?
Not necessarily. If your employer has 20 or more employees and you stay on the group plan, you can usually delay Part B penalty-free until you retire. Most people still take Part A at 65 because it is premium-free, though not if they are contributing to an HSA.
Does COBRA count as employer coverage for Medicare?
No. Medicare does not treat COBRA as active employer coverage for Part B. Your eight-month Special Enrollment Period starts when your employment ends, and it keeps running the entire time you are on COBRA. This is the most common and costly mistake in this whole process.
What happens if I miss the eight-month window?
You would have to wait for the General Enrollment Period, which runs January through March, with coverage starting the first of the month after you sign up. You would also owe the Part B late penalty, which is 10% of the premium for every full year you went without, for life.
Can I keep contributing to my HSA once I am on Medicare?
No. Enrollment in any part of Medicare, including premium-free Part A, ends your eligibility to contribute. Because Part A can be backdated up to six months for people enrolling after 65, stop contributions roughly six months before you apply to avoid excess contributions and a tax penalty.
Should I keep the employer plan and add Medicare?
Sometimes, and it depends on cost, network, and whether the employer plan covers a spouse or dependents who are not yet 65. Running both can make sense at a large employer with a rich plan. Often it does not. It is worth pricing side by side rather than assuming.
What paperwork do I actually need?
Two forms. CMS-40B is your application for Part B, and CMS-L564 is the employment information form your employer signs to prove you had creditable coverage. Submit them together to Social Security. We walk clients through both at no charge.
Working out your timing?
Book a free call and we will map your dates, confirm which coverage pays first, and make sure the paperwork is in before the deadline. No cost, no obligation, no pressure.
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