How Does Medicare Work When You Have Existing Coverage?

Q. I love my job, and don’t have any plans to retire anytime soon, unless my wife insists on me doing so, so we can travel. We are both turning 65 this year, and will be eligible for Medicare soon. Since Medicare is health insurance, and I already have health insurance through my job for both of us, do you know how it works for people in our situation? My HR department didn’t know anything about Medicare when I asked them. Thanks for your help!

A. Medicare is the federal government health insurance program for people age 65 and older, and for people with disabilities. It can often be challenging to figure out how Medicare benefits work with existing health benefits and, even employers often don’t have all the answers.

It is important for people to understand their rights and know when they need to enroll in Medicare. Many people do not know when they should sign up for Medicare benefits, do not get accurate advice, or do not enroll at the right time.  As a result, they are faced with financial consequences or significant gaps in health insurance coverage.

Below are instances that may apply to your situation, from the experts at

If You Work for a Small Employer. . .

If you work for a small employer with fewer than 20 employees (fewer than 100 employees if you are under 65 and disabled) and become eligible for Medicare, you should take Medicare. Medicare will be the primary insurer and your employer’s insurance will be the secondary insurer.

Medicare Part A (hospital insurance) is usually free and Part B (medical insurance) charges monthly premiums. In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.

If you are part of a high-deductible health plan and have a Health Savings Account (HSA) to pay for medical expenses, you can no longer contribute to your HSA if you enroll in Medicare Part A and/or B. You may, however, continue withdrawing money from your HSA after you enroll in Medicare to pay medical expenses.

If You Work for a Large Employer. . .

If you are currently working at a company with 20 or more employees (100 employees or more if you are under 65 and disabled), then you can wait to sign up for Medicare Part B. This is because your employer’s group insurance can still be your primary payer. You will be given a Special Enrollment Period (SEP) to enroll in Part B without penalty while you’re still working and for up to eight months after you retire or lose your current employer coverage. It’s important to enroll before the deadline so you do not have any periods of time without coverage.

If You Are Self-Employed. . .

If you are self-employed and have an individual policy, then you should take Medicare. Keep in mind that if you have dependents that are being covered by your individual policy that are not eligible for Medicare, dropping your policy may affect their benefits.

If you are self-employed and have insurance through a group health plan, then whether you need Medicare depends on the size of your group health plan. If your insurance is through a group health plan with 20 or more employees (100 employees or more if you are under 65 and disabled), then you can wait to sign up for Part B because the group insurance is primary to Medicare.

If your insurance is through a group health plan with fewer than 20 employees (fewer than 100 employees if you are under 65 and disabled), then this insurance is secondary to Medicare. In this situation, you should not wait to sign up for Medicare Part B because you will be penalized as stated above.



If you are in a group health plan that is part of a multi-employer plan or association, such as the National Association for the Self-Employed, that offers group health plans to its members, then the size of the largest employer within the multi-employer plan determines whether that insurance is primary or secondary to Medicare.

Medicare does care about long-term care

Whether Medicare is your primary or secondary health insurance, please know that Medicare (and, for that matter, employer health plans) do not pay one penny for long-term care. Medicare and private health insurance ONLY pays for short-term therapy and skilled care in a nursing home for up to 100 days. For long-term care, the main government benefit is Medicaid, but there are strict and very complex financial requirements that must be met in order to qualify for Medicaid, including the requirement of having less than $2,000 of countable assets to your name. However, with proper Medicaid asset protection planning, almost everyone can eventually qualify for Medicaid when needed, without having to be broke or to first spend down your life savings. If you have a loved one who is nearing the need for long-term care or already receiving long-term care, please call us to make an appointment for an initial consultation:

Fairfax Medicaid Planning: 703-691-1888

Fredericksburg Medicaid Planning: 540-479-1435

Rockville Medicaid Planning: 301-519-8041

DC Medicaid Planning: 202-587-2797

Print This Page
About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.