Many employers and unions keep covering people after they retire. The card may look the same and the doctors may be the same. For Medicare, though, retiree coverage is a different thing from the plan you had while working, and mixing them up can cost you.
Retiree coverage is not coverage from current work
Social Security puts it in one line: "COBRA and retiree health coverage don't count as current employer coverage" (SSA Publication 05-10043). Social Security's manual calls a plan based on former employment a retirement plan (POMS HI 00805.266). That means retiree coverage:
- doesn't let you put off Part B without a penalty,
- doesn't open a Special Enrollment Period when it ends (Medicare.gov), and
- doesn't keep those months out of the late-penalty count.
Medicare usually pays first
If you have both Medicare and retiree coverage from a former employer, Medicare generally pays first. Medicare then sends whatever it doesn't cover to your retiree plan (Medicare.gov).
Your retiree plan may not pay if you skip Part B
Medicare.gov warns that retiree coverage "might not pay your medical costs during any period of time when you were eligible for Medicare but didn't sign up for it." You may need both Part A and Part B to get full benefits from your retiree coverage.
Some retiree plans add extras. Others limit what they pay. Your benefits administrator, or the plan's benefit booklet, has the details for your plan.
Your 8 months start when the job ends
If you were working and on your employer's plan, you do get a Special Enrollment Period. It just starts when your job or employee coverage ends, whichever comes first. Moving onto the retiree plan doesn't restart or extend it.
Example: Dan retires. His job and his employee coverage both end in June 2026, and the company's retiree plan picks him up in July 2026.
- His Part B window runs July 2026 through February 2027. The last day is February 28, 2027.
- The best move is to sign up while still working, in April, May or June 2026, and pick July 2026 as the start month. Signing up in July 2026 and choosing July also works.
- If he waits until the retiree plan ends, his window will be long gone, and he'll face the General Enrollment Period and possibly a penalty.
Since Medicare generally pays first once he's retired, having Part B start in July 2026 also avoids months when the retiree plan might not pay because he was eligible for Medicare but hadn't signed up. See when does Part B start for how the start month works.
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What counts and what doesn't
| Your coverage | Lets you wait on Part B? |
|---|---|
| Employee plan from your current job | Yes |
| Plan from your spouse's current job | Yes |
| Retiree plan from a former employer | No |
| Retiree plan while you work for a different employer | No |
| Retiree plan, and the same employer rehires you for enough work to earn coverage | Yes, it becomes current-employment coverage |
| Union hours-bank coverage still funded by your bank | Yes, until the bank runs out |
| COBRA | No |
Working again doesn't change it, unless it's the same employer
Some retirees take a part-time job somewhere else. That doesn't turn the retiree plan into current-employment coverage. Social Security's manual says that if you're employed by an employer other than the one providing the plan, it's a retirement plan (POMS HI 00805.266).
The exception: if the employer that provides your retiree plan rehires you, and the work is enough that you would have earned coverage had you not retired, the plan counts as current-employment coverage. That's true even if the premium comes out of your pension.
The union hours-bank exception
Some union members, often in trades like construction, have an "hours bank." Contributions are banked in a reserve account that pays for future health coverage. For the Special Enrollment Period and the penalty, these members, including retirees, keep current employment status until the bank no longer funds their coverage (POMS HI 00805.278).
Social Security's example: Mr. Giles turned 65 in January 2010 and skipped Part B because of coverage paid from his union hours bank. In March 2014 the union told him the hours would run out on May 31, 2014. He could sign up any month while the bank paid for coverage, or in the 8 months starting June 2014.
CMS-L564 has a separate "Hours Bank Arrangements" block for this. See how to fill out CMS-L564. A surviving spouse who receives the remaining hours-bank funds also keeps current employment status until they're used up.
If you were already retired at 65
To use the Special Enrollment Period, you must have had coverage from current work (or Part B) in your first month of Part B eligibility and every month since (42 CFR 407.20). If you were already on a retiree plan when you turned 65, you don't meet that test. Medicare.gov's advice for coverage like this: if it isn't employer group health plan coverage, sign up for Medicare when you turn 65 to avoid the Part B penalty.
If that time has passed, the General Enrollment Period is usually your route. See how the late penalty is counted.
Questions for your benefits administrator
- Will my benefits, or my family's, change when I get Medicare?
- Do I need both Part A and Part B for the retiree plan to pay?
- Is your drug coverage creditable?
- Do you offer supplemental coverage that works with Medicare?
- Will I or my family lose retiree coverage if I join a Medicare plan you don't offer?
For the full 8-month rules, see the Part B Special Enrollment Period guide.