When you have job-based health coverage at 65, federal Medicare Secondary Payer rules decide whether that plan or Medicare pays first. The biggest factor is the size of the employer. Getting it wrong can leave you with large unpaid bills and a lifelong late-enrollment penalty.
The 20-employee rule and other "who pays first" rules
| Your situation | Who pays first |
|---|---|
| 65 or older, coverage from your or your spouse's current job, employer has 20 or more employees | The job plan; Medicare pays second |
| 65 or older, coverage from current job, employer has fewer than 20 employees | Medicare; the job plan pays second |
| Under 65 with Medicare because of a disability, coverage from current job, employer has 100 or more employees | The job plan |
| Under 65 with a disability, employer has fewer than 100 employees | Medicare |
| End-stage renal disease (ESRD), any group plan | The group plan for the first 30 months of Medicare eligibility, then Medicare |
| Retiree coverage or COBRA | Medicare |
"20 or more employees" means the employer had 20 or more employees for each working day in at least 20 weeks of the current or previous calendar year. If your employer belongs to a multi-employer plan, Medicare.gov says the 20-employee rule is met if at least one employer in the group has 20 or more employees; ask the plan in writing who pays first for you.
What "pays first" means in practice
The primary payer pays its share of a bill first. The secondary payer then looks at what's left and pays according to its own rules.
- Job plan pays first (large employer): your plan pays as usual. If you also have Medicare, Medicare may pick up some of what's left.
- Medicare pays first (small employer) and you have Part B: Medicare pays its share, then the job plan pays some or all of the rest.
- Medicare should pay first but you didn't sign up for Part B: Medicare pays nothing because you aren't enrolled, and the job plan may pay only what it would have paid after Medicare. You can be left owing most of the bill.
The small-employer trap. If you work for an Oregon business with fewer than 20 employees and skip Part B because "work covers me," you may find out after a big claim that your plan expected Medicare to pay first. When you do sign up, you may also owe the Part B late penalty: 10% of the standard premium for each full 12 months you could have had Part B, for as long as you have it.
If you work for a small Oregon employer (fewer than 20)
- Sign up for Part A and Part B during your Initial Enrollment Period around your 65th birthday.
- Read your plan documents or ask the plan in writing how it pays once you have Medicare. Some small-employer plans require you to enroll in Medicare.
- If you have an HDHP with an HSA, enrolling in Medicare ends HSA contributions. That is often still the right choice when Medicare pays first. See HSAs and Medicare.
If you work for a large Oregon employer (20 or more)
- You can usually delay Part B without penalty while you have coverage from current work.
- Many people take premium-free Part A (unless they contribute to an HSA).
- You can delay Part D if the plan's drug coverage is creditable; check the yearly notice.
- When the job or coverage ends, you have 8 months to sign up for Part B. See the Part B special enrollment period.
The COBRA myth
COBRA doesn't count as coverage from current employment and doesn't extend your time to sign up for Part B. Your 8-month window starts the month after your job (or job coverage) ends, even if you elect COBRA.
Example: you leave a job in March and take 18 months of COBRA. Your Part B window runs April through November of that year. If you wait until COBRA ends, you will have missed it: you'll have to use the General Enrollment Period (January 1 – March 31, coverage the month after you sign up) and pay a Part B late penalty for as long as you have Part B.
COBRA also generally pays after Medicare. If you are eligible for Medicare and don't sign up, COBRA may pay little.
Retiree coverage, TRICARE, VA and federal plans
- Retiree coverage: not coverage from current employment. Sign up for Part B when you are first eligible. Many retiree plans pay only after Medicare. In Oregon, PEBB and OEBB retiree medical coverage ends when you become eligible for Medicare. See PEBB and Medicare and OEBB and Medicare.
- TRICARE For Life: requires Medicare Part A and Part B.
- VA health care: VA coverage doesn't let you delay Part B without penalty, and Medicare doesn't pay for care you get at the VA. VA drug coverage does count as creditable for Part D. See veterans and Medicare in Oregon.
- Federal employees and retirees (FEHB): coverage while you are actively working counts as current-job coverage. As a retiree, you can keep FEHB without Part B, but if you add Part B later outside an enrollment period, the Part B late penalty can apply; ask your plan how it works with Medicare.
Union plans, the self-employed and Marketplace coverage
- Union and multi-employer plans: the plan generally pays first if at least one participating employer has 20 or more employees, but ask the plan in writing how it treats you.
- Self-employed: a group plan from your own business counts only if it is a group health plan based on current employment; an individual policy does not.
- Marketplace plans: not job-based coverage. Sign up for Medicare when you're first eligible. Medicare.gov says that once you have Part A, you generally can't keep getting premium tax credits for a Marketplace plan.
- A spouse's plan: counts if it is based on your spouse's current job and the employer has 20 or more employees. See spouse on an employer plan.
Part D creditable coverage
Separately from Part B, check whether your job's drug coverage is creditable (expected to pay at least as much as standard Part D). Your plan must tell you each year before October 15. With creditable coverage, you can delay Part D without a penalty and you get 2 full months after it ends to join a plan.
If you go 63 days or more in a row without creditable coverage, you may owe a Part D late penalty: 1% of the national base beneficiary premium ($41.33 in 2027) for each full month without coverage, for as long as you have Part D. See Part D creditable coverage.
When to enroll, and when to delay
- Confirm the employer's size. Ask HR or the plan, in writing, whether the plan pays first or second for you at 65.
- Confirm it's coverage from current work. Not COBRA, not retiree coverage.
- Check Part D status. Keep the yearly creditable-coverage notice.
- Decide on Part A. Take it at 65 unless you want to keep contributing to an HSA.
- Plan Part B before you retire. Sign up while still covered, or within 8 months after, and ask for a start date that lines up with the end of your job coverage.
- Get Form CMS-L564 before your last day. Your employer completes Section B. You can also request a call from a licensed insurance agent for help reviewing Medicare plan choices from the companies they work with.
Sources
- Medicare.gov — Which insurance pays first
- Medicare.gov — Working past 65 (COBRA, retiree coverage, Marketplace)
- 42 CFR § 411.172, Medicare benefits secondary to group health plan benefits for the working aged (via Cornell LII)
- CMS — Form CMS-L564, Request for Employment Information
- Medicare.gov — Creditable drug coverage
- Medicare.gov — Avoid late enrollment penalties
- CMS — 2027 Part D base beneficiary premium (July 28, 2026)
- TRICARE — TRICARE For Life
- Or. Admin. Code § 101-050-0010, PEBB retiree coverage (via Cornell LII)
- Or. Admin. Code § 111-050-0015, OEBB early retiree coverage (via Cornell LII)
Frequently asked questions
Does my employer plan pay before Medicare?
If you are 65 or older and the coverage is from your or your spouse's current job at an employer with 20 or more employees, the employer plan pays first and Medicare second. If the employer has fewer than 20 employees, Medicare generally pays first.
Does COBRA count as current employer coverage?
No. Medicare says COBRA doesn't extend your time to sign up. The 8-month Part B special enrollment period starts the month after the job or the job-based coverage ends, whichever is first, even if you take COBRA. COBRA also generally pays after Medicare.
What about retiree health coverage?
Retiree coverage isn't coverage from current employment, so it doesn't let you delay Part B without penalty. Medicare.gov warns that retiree coverage may not pay for services if you don't have Part A and Part B.
Do I need Part B if I have TRICARE For Life?
Yes. TRICARE For Life requires you to have Medicare Part A and Part B, and Medicare pays first for services both cover.
What if my spouse has employer coverage?
If you are covered by your spouse's group plan based on their current job and the employer has 20 or more employees, that plan pays first and you can usually delay Part B. Ask the plan in writing before you rely on it.
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