Most Medicare mistakes are timing mistakes, and they are made while people are still on your plan.
Whether your group plan or Medicare pays first depends on your size and the person’s status, and that decides when someone needs Part B. We explain the rules to HR and to the employees involved before a window closes, so nobody learns about a penalty from a Medicare bill.
The order of payment is set by federal rules, not by anyone’s preference.
Getting it wrong costs twice: claims paid by the wrong party, and Part B skipped when it was needed.
Active Employees at Larger Employers
With 20 or more employees, the group plan pays first for an active employee aged 65 or over and for a covered spouse. Delaying Part B is usually safe for them, which is why many should not rush to enroll.
Active Employees at Smaller Employers
Below 20 employees, Medicare generally pays first and the group plan second. An employee who skips Part B can find the plan paying only its secondary share, so small employers need this conversation before 65, not after. Employer size decides Medicare coordination for active employees.
Medicare Through Disability
For someone entitled to Medicare because of disability, the group plan pays first only where the employer has 100 or more employees. Below that line Medicare pays first, which changes the enrollment advice entirely. Disability-based Medicare follows a different employer size rule.
Retirees
Once employment ends, Medicare pays first regardless of employer size and retiree coverage pays second. A retiree without Part B can face a gap the plan was never built to fill. Part B enrollment is essential for retirees with retiree coverage.
Penalties are permanent, so the enrollment calendar matters more than the premium.
Late enrollment penalties for Part B and Part D generally last as long as the person has that coverage. We track the windows that apply to each situation.
The Part B Special Enrollment Period
Someone covered through active employment can enroll in Part B without penalty up to 8 months after the job or the coverage ends, whichever comes first. The clock starts at the end of employment, which is why the retirement date is the one to plan around.
The Part B Penalty
Missing the window can mean an extra 10% on the Part B premium for each full year they could have enrolled and did not, for life, plus a wait for the general enrollment period. We flag the people at risk before their window closes.
Part D and Creditable Coverage
Going 63 days or more without creditable drug coverage triggers a Part D penalty. Your plan has to tell Medicare-eligible members before October 15 each year whether its drug coverage is creditable, and report its status to CMS, so that notice is not optional paperwork.
Enrolling in Medicare ends HSA contributions, and Part A can reach back in time.
Employees on a high-deductible plan are the ones most likely to be caught by surprise.
No Contributions After Enrollment
Once someone is enrolled in Medicare, they can no longer contribute to an HSA. Delaying Medicare while still working is often right for an HSA saver, and we show them when it is not. Timing Medicare enrollment protects HSA savings.
Retroactive Part A
Part A can begin retroactively for someone who applies after 65. Medicare’s own guidance is to stop HSA contributions 6 months before retiring or applying for Social Security, so the timing has to be planned, not discovered. Planning around retroactive Part A prevents excess HSA contributions.
Social Security Brings Part A
Starting Social Security benefits after 65 generally brings Part A with it. An employee who claims Social Security while still contributing to an HSA creates an excess contribution, which is why we coordinate both decisions and leave the tax correction to a CPA.
What HR and employees ask about Medicare.
Should every employee sign up for Medicare at 65?
Not necessarily. At a larger employer many keep the group plan as primary and delay Part B. The right answer depends on employer size, spouse coverage and HSA use, so we walk through it case by case. Medicare timing depends on each employee’s situation.
Can we encourage older employees to move to Medicare?
Not at employers subject to the working-aged rules: the plan cannot take Medicare entitlement into account or offer incentives to drop group coverage. Counsel confirms any design question; we flag where it arises. Medicare Secondary Payer rules limit how employers approach older workers.
Who explains this to the employee?
We do, alongside HR. We meet with employees approaching 65 or retirement, explain their options in plain terms and leave the decision with them. Personal Medicare guidance helps employees make confident decisions about Part B, HSAs and group coverage. The choice stays theirs.
Related reading: Coordination of Benefits
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
COBRA Continuation Coverage (29 U.S.C. 1161)
Requires many group health plans to offer temporary continuation coverage after a qualifying event.
Health Savings Accounts (26 U.S.C. 223)
Tax rules for health savings accounts paired with qualifying high-deductible health plans.
Medicare Secondary Payer (42 U.S.C. 1395y)
Determines when Medicare pays after an employer group health plan.
Creditable Prescription Coverage (42 CFR 423.56)
Defines creditable coverage for Medicare Part D disclosure and notice rules.
Medicare Secondary Payer Reporting
Who reports Medicare beneficiaries on your plan to CMS.
Medicare HRA
Reimbursing Medicare premiums for retirees.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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