When employees approach age 65, they often turn to HR with questions about Medicare and their employer health benefits. The rules governing how Medicare coordinates with group health plans can be complex—and getting them wrong can result in late enrollment penalties, coverage gaps, or unnecessary costs for your employees.
As licensed Medicare agents serving North Carolina businesses, we help HR managers provide employees with accurate, up-to-date guidance. We understand the coordination rules, enrollment deadlines, and common pitfalls—and we're here to help at no cost to you or your employees.
Medicare rules change frequently, and the details matter. A licensed Medicare agent specializing in employer group health plan coordination can save your HR team time by answering the more complex questions employees bring to you. We can help with:
Explaining how Medicare coordinates with your company's group health plan
Clarifying when employees must enroll in Medicare vs. when they can delay
Identifying late enrollment penalty risks
Explaining Health Savings Account (HSA) rules when Medicare eligibility approaches
Walking employees through their Medicare enrollment options
Comparing costs between staying on employer coverage vs. transitioning to Medicare
Our services are free to employers and employees. We're here to be a resource for your HR team whenever Medicare questions arise.
Here are the questions HR teams hear most often—along with the answers your employees need.
When should employees enroll in Medicare?
Most people become eligible for Medicare at age 65. The Initial Enrollment Period (IEP) is a seven-month window: it begins three months before the month they turn 65, includes their birthday month, and ends three months after.
Whether an employee should enroll immediately or can delay depends on two factors: the size of your company and whether the employee is actively working.
Companies with 20+ employees: The employer group health plan is primary. Employees can delay Medicare enrollment without penalty while covered by the group plan through current employment.
Companies with fewer than 20 employees: Medicare is primary. Employees must enroll in Medicare Parts A and B during their Initial Enrollment Period to avoid late enrollment penalties and coverage gaps.
Important for small employers: If an employee at a company with fewer than 20 employees doesn't enroll in Medicare when first eligible, the group health plan may refuse to pay claims, since Medicare should be paying first. The employee could also face permanent late enrollment penalties.
Is Medicare primary or secondary with an employer health plan?
The answer depends on your company size:
Employers with 20 or more employees:
The employer group health plan pays first (primary)
Medicare pays second (secondary)
An employee can delay Medicare enrollment without penalty
Many employees enroll in premium-free Part A at 65 for additional hospital coverage
Employers with fewer than 20 employees:
Medicare pays first (primary)
The employer group health plan pays second (secondary)
Employee MUST enroll in Medicare Part A and Part B when first eligible
If the employer doesn't offer creditable drug coverage, the employee should also enroll in Part D
Note: For employees under 65 who are Medicare-eligible due to disability, the threshold is 100 employees, not 20.
What happens when an employee retires or loses employer coverage?
When an employee retires or otherwise loses employer group health coverage (or their employment ends), they have a Special Enrollment Period (SEP) to sign up for Medicare without penalty:
8-month window: The SEP begins the month after employment ends or group health coverage ends, whichever happens first.
No late penalty: Employees who enroll during this SEP won't face late enrollment penalties for Part B or Part D.
Missing the window matters: If an employee misses this 8-month SEP, they must wait until the General Enrollment Period (January 1 – March 31), and their coverage won't start until July 1. They may also face permanent late enrollment penalties.
Documentation required: Employees will need proof of prior creditable coverage. The employer typically provides Form CMS-L564 (Request for Employment Information), and the employee completes Form CMS-40B (Application for Enrollment in Medicare Part B).
How does COBRA work with Medicare?
COBRA is NOT the same as active employer coverage. This is a common and costly mistake.
When an employee is on COBRA:
Medicare is primary, COBRA is secondary
The employee MUST enroll in Medicare during their Initial Enrollment Period
COBRA typically ends when the person becomes entitled to Medicare
COBRA does NOT count as "coverage through current employment" for delaying Medicare
If an employee is already on COBRA when they turn 65, they must enroll in Medicare Parts A and B during their Initial Enrollment Period. Otherwise, they'll face late penalties and may have a coverage gap.
Does Medicare cover spouses and dependents?
No. Unlike employer group health plans, Medicare is individual coverage only. Each person must qualify for and enroll in their own Medicare coverage based on their own eligibility.
If an employee has family coverage under the employer plan, Medicare applies only to the employee's own coverage—not to the employee's spouse or dependents. The spouse and dependents continue to be covered by the group plan until they become Medicare-eligible themselves or the group coverage ends.
When must employees stop HSA contributions?
Once enrolled in any part of Medicare (A, B, or D), an employee can no longer contribute to a Health Savings Account. This is one of the most important rules for employees with HSAs approaching age 65.
The 6-Month Lookback Rule (Critical):
When someone enrolls in premium-free Medicare Part A after age 65, coverage is backdated up to 6 months (but not earlier than the month they turned 65). Any HSA contributions made during that retroactive period become "excess contributions" subject to a 6% IRS tax penalty.
What this means for employees:
If an employee plans to enroll in Medicare at 65, they should stop HSA contributions 6 months before their Medicare coverage begins
If an employee intends to delay Medicare to continue HSA contributions, they must delay BOTH Part A and Part B
If receiving Social Security benefits, the employee is automatically enrolled in Medicare Part A, and can no longer contribute to an HSA
HSA Contribution Limits (2025-2026):
2025: $4,300 (individual) / $8,550 (family)
2026: $4,400 (individual) / $8,750 (family)
Catch-up contribution (age 55+, not enrolled in Medicare): $1,000 additional
Good news: After enrolling in Medicare, employees can still USE their existing HSA funds tax-free for qualified medical expenses—including Medicare premiums (Parts B and D), deductibles, copays, and coinsurance. They just can't make new contributions.
What are the late enrollment penalties?
Missing Medicare enrollment deadlines can result in permanent penalties that increase premiums for as long as the employee has Medicare:
Part B Late Enrollment Penalty:
10% added to the Part B premium for each full 12-month period the person could have been enrolled but wasn't
This penalty is permanent—it applies as long as the person has Part B
Standard Part B premium in 2026: $202.90/month
Part D Late Enrollment Penalty:
1% of the national base beneficiary premium for each month without creditable drug coverage
This penalty is also permanent
Applies if there's a gap of 63+ days without creditable drug coverage
Example: If an employee delays enrolling in Part B for 3 years (36 months), they'll pay a 30% penalty on their Part B premium for life. At the 2026 standard premium of $202.90, that's an extra $60.87 per month, or $730.44 per year—permanently.
Here's a quick reference for employees who are new to Medicare:
Part A (Hospital Insurance):
Covers inpatient hospital care, skilled nursing facility care, hospice, and some home health care
Premium-free for most people (those with 40+ quarters of work history)
2026 hospital deductible: $1,736 per benefit period
Part B (Medical Insurance):
Covers doctor visits, outpatient care, preventive services, and medical equipment
2026 standard premium: $202.90/month (higher for high-income individuals)
2026 annual deductible: $283
Part C (Medicare Advantage):
Private health plans that provide Part A and Part B coverage
Most include Part D drug coverage
Often include extra benefits like dental, vision, and hearing
Have an annual out-of-pocket maximum ($9,250 in 2026)
Part D (Prescription Drug Coverage):
Covers prescription medications
Available as standalone plans or included in Medicare Advantage
2026 out-of-pocket maximum: $2,100
Medigap (Medicare Supplement):
Private insurance that helps pay costs Original Medicare doesn't cover (deductibles, coinsurance)
Works only with Original Medicare (Parts A and B), not with Medicare Advantage
Does not cover prescription drugs
Medicare coordination rules can be confusing, but your employees don't have to figure it out alone—and neither does your HR team. Our licensed Medicare agents in North Carolina specialize in helping employees understand how Medicare works with employer coverage.
We can:
Answer employee questions about Medicare enrollment timing and options
Explain how your group health plan coordinates with Medicare
Help employees compare costs between employer coverage and Medicare
Guide employees through their Medicare enrollment
Provide on-site or virtual Medicare education sessions for your team
Contact Health Plans of NC at 1-800-797-0327 to connect with a licensed Medicare agent who can help your employees make informed decisions about their healthcare coverage.
Does an employee have to enroll in Medicare at 65 if they're still working?
It depends on company size. If the employer has 20 or more employees, the employee can delay Medicare enrollment without penalty while covered by the group plan through current employment. If the employer has fewer than 20 employees, the employee must enroll in Medicare when first eligible—Medicare is primary in this scenario.
Can an employee have both Medicare and employer insurance?
Yes. Many employees at large employers (20+ employees) enroll in premium-free Medicare Part A at 65 for additional hospital coverage, while staying on the employer plan as primary. The two plans coordinate: the employer plan pays first, then Medicare pays second.
When does an employee need to stop HSA contributions for Medicare?
Employees should stop HSA contributions 6 months before enrolling in Medicare. Because Part A coverage is backdated up to 6 months, any contributions made during that retroactive period become excess contributions subject to a 6% IRS penalty. If an employee wants to keep contributing to an HSA, they must delay both Part A and Part B.
What happens if an employee misses their Medicare enrollment window?
If an employee misses their Initial Enrollment Period and doesn't qualify for a Special Enrollment Period, they must wait for the General Enrollment Period (January 1 – March 31), with coverage starting July 1. They'll also face late enrollment penalties: 10% added to Part B premiums for each year they could have enrolled but didn't—permanently.
Does COBRA count as employer coverage for delaying Medicare?
No. COBRA does not count as coverage through current employment. Medicare is primary, and COBRA is secondary. An employee on COBRA must enroll in Medicare during their Initial Enrollment Period or face late penalties. COBRA typically ends when the person becomes entitled to Medicare.
What is the Medicare Part B premium in 2026?
The standard Medicare Part B premium for 2026 is $202.90 per month. Higher-income individuals pay more due to Income-Related Monthly Adjustment Amounts (IRMAA), which are based on tax returns from two years prior.
Health Plans of NC Staff