Still Working at 65? Here’s What to Do About Medicare and Social Security

Turning 65 is a milestone that often raises questions about Medicare and Social Security. But if you’re still working — and especially if you have employer-sponsored health insurance — your decisions may not follow the traditional retirement playbook.

This guide outlines what you need to know about how continued employment affects Medicare enrollment and Social Security strategy.

Medicare: Do You Need to Enroll at 65?

You become eligible for Medicare at age 65, but whether you need to enroll right away depends on your health insurance situation.

If You Have Employer Coverage Through a Company with 20 or More Employees

• You can delay Medicare Part B (medical insurance) and Part D (prescription drug coverage) without penalty.

• Many people still choose to enroll in Part A (hospital insurance), which is typically premium-free, while keeping their employer plan as primary coverage.

• However, if you're still contributing to a Health Savings Account (HSA), be careful — enrolling in Medicare Part A makes you ineligible to continue making HSA contributions.

• Once you leave your job or lose coverage, you’ll qualify for a Special Enrollment Period and have eight months to sign up for Medicare Part B without facing late penalties.

If Your Employer Has Fewer Than 20 Employees

• You generally need to enroll in Medicare Parts A and B at age 65. Medicare becomes your primary payer, and your employer plan pays secondary.

• Failing to enroll can result in a gap in coverage and a permanent late enrollment penalty on your Medicare premiums.

• We strongly recommend reaching out to the HR contact at your employer well in advance of your 65th birthday to fully understand what actions you need to take with regard your Medicare enrollment for both you and your spouse if they are covered by your plan as well. 

Don’t Overlook Part D Requirements

If you delay enrolling in Medicare Part D, you must have “creditable” prescription drug coverage through your employer — meaning coverage that is expected to pay, on average, as much as Medicare’s standard prescription drug plan.

Be sure to confirm with your employer that your current plan meets Medicare’s creditable coverage standard to avoid future penalties.

How Social Security Fits Into the Picture

While you can claim Social Security as early as age 62, most people don’t reach their full retirement age (FRA) until age 67. While you are eligible to begin collecting your social security benefit while you are still working and prior to recaching age 67, it may make sense to delay receiving your social security benefits to avoid the earned income penalty.

If you claim before your full retirement age and your earnings exceed the annual limit ($23,400 in 2025), an earned income penalty is assessed against your benefit. For every $2 earned over the limit, $1 in benefits is withheld. These withheld benefits are not lost — your benefit is recalculated at FRA to account for months when payments were withheld.

Example:

If you earn $30,000 in 2025 before reaching FRA, you are $6,600 over the earnings limit. This would result in $3,300 of your Social Security benefits being withheld that year.

After you reach FRA, there is no reduction in benefits, no matter how much you earn.

Also by delay the receipt of your social security benefits, your benefit increase by about 6% per year between the ages of 62 and 67, and then increase by 8% per year between ages 67 and 70.

Key Action Steps at 65 If You're Still Working

• Review your employer health plan: Determine whether it’s considered creditable coverage and how it coordinates with Medicare.

• Decide on Medicare Part A: Enrolling may make sense, but if you're still contributing to an HSA, delay enrollment to remain eligible.

• Verify Part D creditable coverage: Confirm with your employer that your prescription plan meets Medicare’s standards.

• Review your Social Security strategy: Consider whether it makes sense to delay benefits to avoid earnings penalties and increase your monthly payout.

Final Thoughts

Working past age 65 can offer financial flexibility and allow you to delay drawing on Social Security, but it also comes with specific rules around Medicare and benefit eligibility. Taking the time to coordinate your health coverage, HSA contributions, and income planning now can help you avoid unnecessary penalties and make more informed decisions later.

Once you are within 5 year to retirement, it can be beneficial to work with a Certified Financial Planner to create a formal retirement plan which include reviewing what your expenses will be in retirement, social security filing strategy, Medicare coverage, distribution planning, and tax strategies leading up to your retirement date.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions (FAQs):

Do I need to sign up for Medicare when I turn 65 if I’m still working?
If your employer has 20 or more employees and provides group health coverage, you can delay Medicare Part B and Part D without penalty. However, if your employer has fewer than 20 employees, you generally need to enroll in Medicare Parts A and B at 65, as Medicare becomes your primary insurance.

Can I keep contributing to my Health Savings Account (HSA) after enrolling in Medicare?
No. Once you enroll in any part of Medicare, including Part A, you can no longer make HSA contributions. To continue contributing, you must delay all parts of Medicare enrollment until after you stop HSA-eligible coverage.

What happens if I delay Medicare Part B & D while keeping employer coverage?
You can delay Part B & D of Medicare if your employer’s health plan is considered “creditable coverage,” meaning it’s as good as or better than Medicare’s standard plan. If your coverage isn’t creditable, you may face a permanent late enrollment penalty when you eventually sign up for Medicare Part B & D.

How does working past 65 affect Social Security benefits?
You can begin Social Security as early as age 62, but if you earn more than the annual limit before reaching full retirement age (FRA), your benefits may be temporarily reduced. After FRA, your earnings no longer affect your Social Security payments, and delayed benefits increase your monthly amount by up to 8% per year until age 70.

Should I enroll in Medicare Part A at 65 even if I’m still covered by my employer?
Many people enroll in premium-free Part A at 65 while keeping their employer plan as primary coverage. However, if you’re still contributing to an HSA, you should delay Part A enrollment to avoid losing HSA contribution eligibility.

What steps should I take as I approach age 65 while still working?
Confirm whether your employer plan is creditable coverage, decide whether to enroll in Medicare Part A, and review how your plan coordinates with Medicare. Also, evaluate your Social Security filing strategy to balance income needs, taxes, and future benefit growth.