Working past 65: Medicare, IRMAA, and employer coverage

Last reviewed July 2026 · 5 min read

Turning 65 no longer means retiring, but it does mean Medicare decisions — and the rules for people still on an employer plan are full of one-way doors. Whether you can safely delay enrollment turns on one number (how many people your employer has), and two of the most expensive mistakes involve your HSA and a surcharge based on income you earned two years ago.

The 20-employee rule

If you work for an employer with 20 or more employees, the group health plan stays primary and Medicare would pay second. You can decline Part B while that coverage lasts and enroll later with no late penalty. If the employer has fewer than 20 employees, the ground flips: Medicare pays first, and the group plan may pay little or nothing until Medicare has. In that case you generally need to enroll at 65 — skipping Part B can leave you effectively uninsured for the portion Medicare would have covered.

When employment (or the coverage) ends, an 8-month Special Enrollment Period opens to sign up for Part B penalty-free. Two traps inside that rule: COBRA and retiree coverage do not count as “current employment” coverage — staying on COBRA past 65 without Part B invites both gaps and lifelong penalties — and the SEP clock starts when you stop working even if COBRA continues.

The HSA trap: a six-month lookback

HSA contributions require an HSA-qualified high-deductible plan and no Medicare of any part — even premium-free Part A ends eligibility. Worse, if you enroll in Medicare (or claim Social Security, which triggers automatic Part A) after 65, Part A is backdated up to six months. Contributions made during those retroactive months become excess contributions subject to a 6% excise tax until removed. The standard playbook for someone working past 65 with an HSA: delay both Medicare and Social Security while the big-employer plan lasts, keep contributing (for 2026, up to $4,400 self-only or $8,750 family, plus $1,000 catch-up at 55+), and stop contributions six months before enrollment. Prorate the final year’s limit by eligible months.

IRMAA meets your peak earning years

Medicare premiums are income-tested against MAGI from two years earlier. For 2026, the standard Part B premium is $202.90 per month; surcharges start once 2024 MAGI exceeded $109,000 (single) or $218,000 (joint), adding $81.20 to Part B and $14.50 to Part D per person per month, and climbing through five tiers. Working past 65 means enrolling while the lookback points at full-salary years, so many working enrollees land in surcharge tiers automatically. The relief valve: when you finally retire, that is a qualifying life-changing event — you can file Form SSA-44 asking Social Security to use your lower current-year income instead of the two-year lookback, rather than paying surcharges on a salary you no longer earn.

Putting the pieces together

The clean sequence for a big-employer worker: stay on the group plan and HSA past 65, stop HSA contributions six months before the retirement date, enroll in Medicare through the SEP, and file SSA-44 if the lookback years show salary income. For a small-employer worker the sequence collapses: enroll at 65, stop HSA contributions beforehand, and plan around IRMAA from day one. Either way, the decisions knit Medicare rules to your tax return — which is exactly why they belong inside a retirement plan rather than bolted on at 65.

Try it in Deorbit Plan

Set a retirement age past 65 and the simulator keeps modeling employer-era income while charging Medicare and IRMAA per person from 65 on. Because the surcharge looks back two years, the Household panel lets you enter your recent MAGI history, so the first Medicare years are priced off your actual working income. The Taxes & MAGI chart draws the IRMAA tier thresholds as reference lines over your simulated MAGI path — you can see exactly which tier your final working years buy — and the Year table itemizes each year’s healthcare cost as you test earlier or later retirement dates.

Educational content only — not financial, tax, or investment advice.

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