Today, more Americans are working well past 65, the age of eligibility for Medicare. If you are approaching your 65th birthday, and retirement isn’t on the horizon, here’s what you need to know about signing up for Medicare while still working.

Medicare While Working: Your Employer’s Size Matters

Under current rules, if your employer has 20 or more employees, you don’t have to enroll in Medicare if you don’t want to. Your employer’s group plan is the primary payer, which means they pay first on any healthcare bills you have. You can delay enrollment into Medicare until you retire and stop actively working.

If you work for a smaller company with fewer than 20 employees, you must sign up for Medicare as soon as you are eligible. For small companies, Medicare is the primary payer. If you don’t sign up, but stick with your group plan, the group plan can refuse to pay your claims. Even worse, when you do finally sign up for Medicare, you’ll be faced with late enrollment penalties.

However, if you work for a large company, you can still choose to drop your employer coverage and sign up for Medicare. You need to compare the premium costs and coverage under both to see which is better for you.

If you keep your large employer group coverage, you’ll have a special enrollment period after you leave your job. You can sign up for Part A, Part B, Part D, and a Medigap plan, if you like, without penalty, during that time.

Corporate Retiree benefits are secondary to Medicare

Some employers offer retiree health benefits for a period of time after you leave the company. If you have one of these retiree plans, you still need to sign up for Medicare. Medicare is considered the primary payer with retiree insurance plans, so if you don’t enroll, your corporate plan may not pay.

COBRA benefits are also secondary to Medicare

COBRA covers health benefits for up to 18 months after you leave your job. But just as with retiree health benefits, Medicare is the primary payer if you have insurance through COBRA. If you are using COBRA for your insurance benefits, you need to sign up for Medicare as soon as you are eligible.

What happens if you don’t sign up?

Missing your enrollment into Medicare while you are still working or on COBRA can result in penalties and delayed coverage.

Under Medicare rules, it’s the day you actually leave active employment, not the day your COBRA or retiree benefits end, that matters. After you leave your job, you have an eight-month special enrollment period to sign up for Medicare benefits and a Medigap plan, if you choose one. Miss it, and you could be without coverage for many months.

Suppose you quit work in September and you don’t sign up for Medicare. In April, your retiree or COBRA plan realizes you’re eligible for Medicare and stops paying claims.

You’ve missed your special enrollment period, so you won’t be able to enroll in Medicare until the next General Enrollment Period that runs from January 1^st to March 31^st. Your coverage won’t begin until the 1st of the following month you apply, leaving you without health insurance for many months.

In addition, you will likely pay Medicare late enrollment penalties with your Part B and Part D premiums.

How do I sign up for Medicare while working?

Your initial enrollment period starts three months before the month you turn 65 and extends three months after your birthday month. During that seven-month period, you can sign up for Medicare online at the Social Security Administration website (www.ssa.gov). You can also visit your local Social Security office.

If you qualify for premium-free Part A (most people do), it’s a good idea to enroll at 65 even if you don’t take Part B while you work. It can supplement your hospital coverage through your group insurance at your employer and won’t cost you a thing. You can add Part B later during your 8-month special enrollment period after you leave your job.

You can also enroll in a Part D prescription drug plan even if you don’t enroll in Part B of Medicare while working. Most employer health plans have “creditable” coverage that is at least as good as Medicare Part D. If your employer’s plan isn’t creditable, you’ll need to enroll in Part D as soon as you’re eligible to avoid a late enrollment penalty. You should get a letter each year from your insurer letting you know if your prescription drug coverage is creditable.

Get Help with Medicare While Still Working

Whatever you’re considering, it’s very important to talk to your employer’s benefits coordinator before you decide. Your benefits may change if you enroll in Medicare while working, even if it’s just Part A.