More Arizonans are working past 65 than ever before. Some love their work and have no plans to retire. Some need the income. Some just want to keep their group health plan because it covers a spouse or includes benefits they like. Whatever the reason, if you are still working at 65, the Medicare decision gets more complicated.
I am a licensed Medicare broker here in Mesa, and this is one of the most misunderstood topics I run into. Some people enroll in Medicare at 65 when they did not need to and end up paying for coverage they were not using. Others delay Medicare when they should not have and get hit with a permanent late enrollment penalty. The right answer depends on your specific situation, but the rules themselves are knowable. Let me walk you through them.
The Question That Decides Everything: How Big Is Your Employer?
The single biggest factor in whether you should enroll in Medicare at 65 or delay is the size of your employer.
If your employer has 20 or more employees, your group health plan is your primary coverage and Medicare would be secondary if you enrolled. In this scenario, you can usually delay Part B without a penalty, because the law says you have credible coverage through work. You can sign up for Part B later when you actually retire and the employer plan ends.
If your employer has fewer than 20 employees, Medicare becomes your primary coverage at 65 whether you enroll or not. The group plan pays second. If you do not enroll in Medicare in this situation, your employer plan can refuse to pay for things Medicare would have covered, and you can be left with massive bills. In small-employer situations, you almost always need to enroll in Part A and Part B at 65.
This rule catches people off guard all the time. They assume that because they have employer coverage, they are fine. They are fine in the first scenario. They are not fine in the second. If you work for a small business in Arizona, this is the first thing to confirm.
What Part A Looks Like When You Are Working
Part A covers hospital stays and is usually free. If you or your spouse paid Medicare taxes for at least 10 years, your Part A premium is zero. Because there is no monthly cost, almost everyone enrolls in Part A at 65 even if they are still working.
There is one big exception. If you are contributing to a Health Savings Account through your employer, you cannot enroll in any part of Medicare without losing the ability to contribute. The IRS rules treat Medicare enrollment, including premium-free Part A, as disqualifying coverage for HSA contributions. If your HSA contributions matter to you, you have to delay Part A enrollment until you are ready to stop those contributions. This is a big enough topic that I wrote a separate article on it.
If you are not on an HSA plan, go ahead and enroll in Part A at 65. It is free, it gives you some hospital coverage on top of whatever your employer plan does, and it does not create any complications.
The Real Decision Is About Part B
Part B covers doctor visits and outpatient care. It has a monthly premium, which in 2026 is $185 a month for most people. Higher earners pay more under the IRMAA rules. If your modified adjusted gross income two years ago was over $103,000 individual or $206,000 joint, your premium is higher.
For most people working past 65 with employer coverage from a company of 20 or more, the answer is to delay Part B. You are paying a premium for coverage you do not need because your group plan already covers doctor visits. When you retire and your employer plan ends, you have a Special Enrollment Period that lets you sign up for Part B without a penalty.
For people with smaller employers, retiree-only plans, COBRA, or marketplace coverage, the rules are different. None of those count as creditable coverage for delaying Part B. If you skip Part B in those scenarios, you build up a 10 percent Part B premium penalty for every 12 months you went without it, and the penalty is permanent. A two-year delay becomes a 20 percent surcharge for the rest of your life.
This is why I always tell clients to talk to me before they assume they can delay. The rule is specific. Group employer coverage from a company with 20 or more employees is the one situation where delaying is generally safe.
Part D and the Drug Coverage Question
Part D covers prescription drugs and has its own late enrollment penalty if you go without creditable drug coverage for more than 63 days after your Initial Enrollment Period.
Most employer plans include drug coverage that counts as creditable. Your HR department should give you a notice every fall confirming whether your plan is creditable. Save that letter. When you eventually enroll in Part D after retiring, you will need to prove you had creditable coverage to avoid the penalty.
If your employer drug coverage is not creditable, you should enroll in a Part D plan at 65 even if you are keeping the rest of your employer coverage. The Part D penalty is small but permanent. Avoiding it is easy if you know the rule.
The HSA Trap That Catches So Many People
Health Savings Accounts have been growing in popularity, and a lot of people in their early 60s are sitting on substantial HSA balances. If you are still contributing to an HSA, the Medicare rules can blow up your retirement plan if you are not careful.
Medicare Part A enrollment, even free Part A, makes you ineligible to contribute to an HSA. It does not matter that Part A is free or that you are still working. Once you are enrolled, you cannot put another dollar into your HSA, and any contributions you made after the effective date may be subject to taxes and penalties.
There is a second wrinkle. When you do enroll in Medicare, Part A coverage is backdated up to 6 months from your enrollment date, but never earlier than your 65th birthday. This means that if you wait until 66 to enroll, your Part A start date will be set retroactively to 6 months before. Any HSA contributions you made during those 6 months become a problem.
If you plan to keep contributing to an HSA past 65, you have to delay Part A enrollment. That means not signing up for Social Security at the same time, because Social Security enrollment automatically triggers Medicare Part A. It also means stopping HSA contributions at least 6 months before you eventually do enroll in Medicare. None of this is intuitive, and the IRS does not send a friendly reminder. A broker who knows the rules can save you from a lot of pain here.
What to Do When You Actually Retire
Whenever you do decide to retire, the transition into Medicare needs to happen on a tight schedule.
When your employer coverage ends, you have an 8-month Special Enrollment Period to sign up for Part B without a penalty. That window starts the month after your employment or coverage ends, whichever comes first. Do not wait until month 7. Get it done early so your coverage starts the month you need it.
You also have a 63-day window to enroll in a Medicare Advantage plan or a Medigap supplement plus Part D plan. Miss that window and you are stuck without coverage until the next Annual Enrollment Period in October.
The smoothest transition I have seen is when someone calls me 60 to 90 days before their retirement date. We get everything lined up so the day after their employer coverage ends, their Medicare and supplement or Advantage plan starts. No gaps, no penalties, no scrambling.
Common Scenarios I See in Mesa
Let me run through three patterns that come up over and over with my clients in the East Valley.
The first is the small business owner or employee. Company has 12 people. Person turns 65 and assumes they can stay on the group plan. They cannot, at least not safely. Medicare becomes primary, and if they get hit with a major claim, the group plan can refuse to pay what Medicare would have covered. We get them enrolled in A and B and a Medigap or Advantage plan. The group plan can stay as secondary if it makes sense, but Medicare is in place.
The second is the dual-income couple where one spouse is working past 65 with a great group plan from a large employer. The working spouse delays Part B because the group plan is creditable. The non-working spouse enrolls in Medicare on their own at 65 because they are not on the group plan in a way that lets them defer. Each person’s Medicare timing is independent.
The third is the high-income earner who plans to keep contributing to an HSA past 65. We map out exactly when they will stop HSA contributions and when they will enroll in Medicare, working backwards from their actual retirement date. This is where the 6-month backdating rule trips people up, and where a broker who has done this many times pays for himself.
Need Help Figuring Out Your Specific Situation?
Working past 65 in Arizona does not have to be confusing, but the rules are specific enough that you do not want to guess. I have been helping seniors in Mesa, Gilbert, Chandler, Tempe, Scottsdale, and across the East Valley make this decision for 7 years.
Call me at 480-296-5804 or request a free consultation. We will walk through your employer coverage, your retirement timeline, and any HSA considerations and figure out exactly when and how to enroll. No pressure, no obligation, and no cost to you.