Can I decline Medicare if I am still working? A Guide for Employed Seniors

Oct 15, 2025 4 min read •

Health Insurance Medicare Working and Retirement

Approximately 20% of Americans aged 65 and older were working in 2024, a figure that continues to rise. This trend has made the question, Can I decline Medicare if I am still working?, a common concern for many nearing or passing retirement age with active employer health insurance. The answer depends heavily on the size of your employer and whether you want to enroll in specific parts of Medicare.

Quick Summary

It is often possible to delay Medicare Part B and, in some cases, Part A, if you have qualifying health coverage through your or your spouse’s current employment. Employer size, HSA contributions, and potential penalties are critical factors to consider before opting out. Special enrollment periods exist to prevent lifetime penalties.

Key Points

Employer Size Matters: Whether you can decline or delay Medicare without penalties depends on if your employer has 20 or more employees.
Delaying Part B is Common: Many people with coverage from a large employer delay Part B, which has a monthly premium, until their employment ends.
Premium-Free Part A is Different: Most people are eligible for premium-free Part A and often enroll at age 65, even if they have employer coverage.
Watch Out for HSAs: Enrolling in any part of Medicare prohibits you from making contributions to a Health Savings Account (HSA).
Understand Late Penalties: Declining Medicare without a valid Special Enrollment Period can lead to permanent, lifetime penalties on your premiums.
Special Enrollment Period: You must enroll within an 8-month window after losing active employer coverage to avoid late enrollment penalties.
Small Employers Require Enrollment: If your company has fewer than 20 employees, Medicare is the primary payer, and you must enroll in Parts A and B at 65.

Can you decline Medicare Part A and B while still working?

Your ability to decline Medicare while actively working hinges primarily on the size of your employer and the type of coverage you have. It is essential to understand the rules for both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) to avoid costly penalties.

For most people who have worked and paid Medicare taxes for 10 years (40 quarters), Part A is premium-free. Because there is no monthly cost, many choose to enroll in premium-free Part A even while still working with employer coverage. However, those contributing to a Health Savings Account (HSA) should be cautious. Once enrolled in any part of Medicare, you can no longer contribute to an HSA without facing penalties. If you must pay a premium for Part A, you can delay it without penalty as long as you have creditable employer coverage.

Medicare Part B has a monthly premium for all enrollees, which is why many working individuals choose to decline or delay it. The key to delaying Part B is having qualifying health coverage through your current employment or your spouse's. You cannot delay Part B without penalty if your coverage is from COBRA, retiree benefits, or the Health Insurance Marketplace.

The crucial role of employer size

Employer size is the single most important factor in deciding whether to decline Medicare Parts A and B while working past age 65. The rules are designed to coordinate your health benefits and determine which plan pays first.

Large Employers (20 or more employees)

If you or your spouse works for a company with 20 or more employees, your group health plan is the primary payer, meaning it pays for your medical services first. In this scenario, Medicare is the secondary payer. With a large employer plan, you can safely decline or delay enrolling in Part B without incurring a late enrollment penalty, as long as you enroll during a Special Enrollment Period (SEP) after leaving your job.

Small Employers (fewer than 20 employees)

For those working for a company with fewer than 20 employees, the situation is reversed. Medicare is the primary payer, and the employer plan is secondary. In this case, you must enroll in Medicare Parts A and B during your Initial Enrollment Period to avoid significant coverage gaps and lifelong penalties. If you don't, your employer's plan might pay little to nothing for services that Medicare would have covered.

Avoiding late enrollment penalties

While you can decline Medicare under certain circumstances, it is crucial to avoid late enrollment penalties when you eventually enroll. A Special Enrollment Period (SEP) is your key to doing so.

Qualifying for an SEP: You qualify for an 8-month SEP that begins the month after your employment or your employer-sponsored health coverage ends, whichever comes first. This applies if you work for a large employer and have creditable coverage.
Late Enrollment Penalties: Without a qualifying SEP, delaying enrollment in Part B results in a permanent premium increase of 10% for every 12-month period you could have been enrolled but were not. Similarly, if you owe a premium for Part A and delay enrollment, you face a 10% premium increase for twice the number of years you delayed.

Comparison of Medicare and Employer Coverage while Working


Feature	Large Employer (20+ employees)	Small Employer (<20 employees)
Who Pays First?	Employer plan (Primary)	Medicare (Primary)
Delay Part B?	Yes, without penalty, as long as you have creditable coverage.	No, you must enroll during your initial period to avoid penalties.
Delay Premium-Free Part A?	Yes, but enrolling can provide secondary coverage benefits.	You must enroll to avoid coverage gaps.
HSA Contributions?	Cannot contribute to an HSA if enrolled in any part of Medicare.	Cannot contribute to an HSA if enrolled in any part of Medicare.
Special Enrollment Period?	Yes, an 8-month window opens when you stop working or lose coverage.	Does not apply; enrollment must happen during your initial period.

Conclusion

For many seniors continuing to work, declining Medicare is a viable option, but it is not without complexities. Understanding the rules, especially regarding your employer's size, is paramount to making the right choice for your financial and health-related future. If you work for a large employer (20+ employees), delaying Part B is often a smart way to avoid unnecessary premiums, provided you enroll during the appropriate Special Enrollment Period to avoid lifetime penalties. However, for those at smaller companies, failing to enroll in both Parts A and B at age 65 will likely result in permanent penalties and significant coverage gaps. Before making a final decision, it is always wise to compare your current employer coverage with Medicare costs and contact your HR department and the Social Security Administration for clarification. You can find more authoritative information on the official Medicare website.

Frequently Asked Questions

Yes, if you work for a company with 20 or more employees, you can typically delay enrollment in Part B without penalty. However, if your employer has fewer than 20 employees, Medicare becomes primary, and you must enroll in Part B.

You will not pay a late enrollment penalty if you delay signing up for Medicare Part B because you have creditable health coverage from your or your spouse’s current employment. You must enroll during your Special Enrollment Period when that employment ends.

Large employers (20 or more employees) must offer the same health benefits to employees 65 and older as they do to younger employees. You can then choose between your employer's plan and Medicare, or have both.

A Special Enrollment Period (SEP) is a specific 8-month window that opens after you or your spouse stops working or loses health insurance based on that employment. It allows you to enroll in Medicare without a late enrollment penalty.

Yes, it is possible to have both, but coordination rules apply. For a large employer (20+ employees), your employer plan pays first. For a small employer (<20 employees), Medicare pays first.

Retiree health coverage and COBRA are not considered active employment coverage. If you are 65 and have these, you should sign up for Medicare when first eligible to avoid late penalties, as Medicare is likely your primary insurance.

For most people, enrolling in premium-free Part A is a good idea. The main exception is if you contribute to a Health Savings Account (HSA), as enrollment in any part of Medicare will prevent you from making further contributions.

References

Medical Disclaimer

This content is for informational purposes only and should not replace professional medical advice. Always consult a qualified healthcare provider regarding personal health decisions.