Turning 65 while still covered at work, or retiring a few years after 65, creates a handoff between two systems that don’t coordinate on their own. Your employer plan follows its own rules. Medicare follows federal rules. Several deadlines start counting the day active employment ends, and no single office tracks them for you.
Most mistakes at this stage aren’t dramatic. They come from reasonable assumptions, such as COBRA counting as job coverage or a Marketplace plan ending automatically. Some of them, though, carry penalties that last for as long as you have Medicare. That makes the few months around retirement more important than any annual plan review that follows.
Because the risk sits in the overlap between plans, it helps to talk with someone who works on both sides of the handoff. The Health Insurance Medicare Services offered by Assurance Network cover individual and family plans, small group coverage, Medicare Supplement, Medicare Advantage and Part D drug plans, with access to multiple carriers. A sensible time to book a review is two or three months before your employer coverage ends. That leaves room to line up start dates instead of rushing to fill a gap.
1. Treating COBRA as Job Coverage
The rule. Coverage based on current employment lets you delay Part B without a penalty. When that employment or coverage ends, whichever comes first, you get an eight month Special Enrollment Period to sign up.
The slip. COBRA continues your old plan, but it isn’t based on current work. The eight month clock runs whether or not you elect COBRA. Many people wait for COBRA to run out after 18 months and only then apply for Part B. By that point the window has closed.
The cost. Missing it can mean waiting for the General Enrollment Period from January through March, plus a Part B penalty of 10% of the standard premium for each full 12 months you went without it. That surcharge generally lasts as long as you have Part B. Retiree health plans and Marketplace coverage don’t extend the window either.
2. Leaving a Gap Between the Last Paycheck and Part B
The rule. When you sign up during a Special Enrollment Period, Part B usually starts the first day of the month after you apply. Medicare.gov’s page on when Medicare coverage starts explains how start dates vary by enrollment period.
The slip. Applying after the job ends can leave a stretch with no primary coverage. Employer plans often end on the last day of the month you leave, or even on your last day of work.
The check. Ask HR for the exact termination date of your coverage in writing. Then apply for Part B early enough that it starts the next day. Social Security also needs Form CMS L564, completed by your employer, as proof of your group coverage.
3. Assuming a Small Employer Plan Pays First
The rule. If your employer has fewer than 20 employees, Medicare generally pays first once you’re 65 and eligible. The group plan pays second.
The slip. Someone at a small company skips Part B because they still have the work plan. When a claim arrives, the group plan may pay only the part Medicare would not have covered, and Medicare paid nothing because Part B was never in place.
The check. Ask the plan administrator directly whether Medicare is primary for you. Some small employers join multi employer arrangements with different rules, so get the answer in writing.
4. Contributing to an HSA Too Close to Medicare
The rule. Once you’re enrolled in any part of Medicare, you can’t contribute to a Health Savings Account. If you apply for Part A after 65, it’s usually backdated up to six months, though never earlier than the month you turned 65.
The slip. A worker keeps funding the HSA through the last paycheck, then applies for Medicare. The retroactive Part A turns part of those deposits into excess contributions that can face tax and an IRS excise charge.
The check. Stop contributions about six months before you apply for Medicare or Social Security, which triggers Part A automatically. Money already in the HSA can still pay many Medicare costs, including Part B premiums. IRS Publication 969 covers eligibility and how to correct excess contributions.
5. Discarding the Creditable Coverage Notice
The rule. Part D has its own late penalty. It’s 1% of the national base beneficiary premium for each month you went without drug coverage that was at least as good as Medicare’s standard benefit. Employer drug coverage counts if it meets that test.
The slip. Plans mail a yearly notice saying whether their drug coverage is creditable. Most people toss it. Years later, a Part D plan asks for proof, and the employee has nothing to show.
The check. Keep every creditable coverage notice with your Medicare paperwork. Enroll in Part D, or a Medicare Advantage plan with drug coverage, within 63 days of losing creditable coverage.
6. Letting a Marketplace Plan Run On
The rule. For people moving from a Marketplace plan rather than a job plan, Marketplace coverage doesn’t end when Medicare begins. Once you qualify for premium free Part A, you generally can no longer receive premium tax credits.
The slip. Two premiums get paid for overlapping coverage. Tax credits received after eligibility may also need to be repaid when you file.
The check. Pick a Marketplace end date that matches your Medicare start date, and cancel the plan yourself through the Marketplace.
7. Spending the One Medigap Window Without Noticing
The rule. Your Medigap Open Enrollment Period is six months long. It begins the first month you’re both 65 or older and enrolled in Part B. During it, insurers generally must sell you any Medigap policy they offer without pricing for health history.
The slip. Someone signs up for Part B at 65 to stay safe, even while still on a strong employer plan. That starts the Medigap clock. When they retire at 68, the window is long gone, and in most states the insurer can underwrite or decline them.
The check. If you’re keeping good employer coverage past 65, consider whether delaying Part B preserves your Medigap window for later. A few states add extra guaranteed issue rights. Your state’s State Health Insurance Assistance Program offers free, unbiased counseling and can explain the local rules.
Each of these handoffs depends on dates, plan details and state rules that change, so treat this as general education rather than personal insurance advice. Nothing here guarantees a specific premium, a coverage outcome or the avoidance of a penalty. Confirm current deadlines with Medicare.gov, the Social Security Administration and your plan administrator before your last day of work, and keep copies of every letter that proves when your coverage began and ended.
