Do You Really Need to Enroll in Medicare at 65? What to Know Before You Make a Mistake
Most people are told they “must” enroll in Medicare at age 65 or face penalties, but that isn’t true for everyone. There are three groups: those who must enroll, those who do not need to enroll, and those who should compare Medicare with their current plan before making a decision. Knowing which group you fall into helps you avoid unnecessary costs and lifelong penalties.
Certain individuals are required to enroll in Medicare at age 65. If you’re no longer working and don’t have employer coverage, you need to enroll to avoid penalties. Anyone on ACA or marketplace plans must move to Medicare at 65 because subsidies end, making Medicare the more affordable option. If you’re on COBRA or Tricare, Medicare becomes the primary payer at 65, so you must enroll to avoid coverage gaps. Employees of small employers fewer than 20 employees also must enroll because Medicare becomes primary once you turn 65.
Not enrolling when required leads to significant penalties. Part A rarely carries a penalty since it is free for most people, but Part B includes a lifetime penalty of 10% for every 12 months you delay without creditable coverage. Part D adds a 1% penalty for every month you go without credible drug coverage. These penalties compound and cannot be removed once applied.
That said, not everyone needs to enroll at 65. If you have employer coverage either your own or your spouse’s from a company with 20 or more employees, you can delay Medicare without penalty. The key is whether the employer plan is considered “creditable,” meaning it meets Medicare standards. Many choose to take free Part A while working, but if you contribute to an HSA, enrolling in Part A will stop those contributions, so delaying becomes the better option.
When you retire or lose employer coverage, you can enter Medicare penalty-free through a Special Enrollment Period. You have eight months to enroll as long as your employer plan remained creditable since age 65. To enroll after 65, you’ll submit two forms: the L564 form, completed by your employer to verify creditable coverage, and the CMS40B form, which activates Medicare benefits. These can be submitted online, by fax, or in person at Social Security.
For people still working, comparing employer coverage to Medicare is an essential step. Medicare Part B costs $185 per month in 2025, so premiums matter, but so do deductibles, co-pays, out-of-pocket maximums, and prescription drug coverage. Medicare Part D drug plans have a cap on annual medication costs $2,000 in 2023 and slightly higher in 2026. Many employer plans do not cap drug expenses, which can be financially risky for individuals on high-cost prescriptions.
Medicare also offers broader provider flexibility. Supplemental plans allow you to see any doctor nationwide who accepts Original Medicare, unlike many employer HMOs and PPOs with limited networks. This freedom is a major advantage for retirees who travel or rely on multiple specialists.
Military veterans and federal employees have unique considerations. Veterans with VA benefits are not required to take Medicare, but many enroll to access a wider provider network. Retired federal employees often transition to Medicare at 65 because their employer plans can become expensive in retirement.
The bottom line is simple: Individuals with small employers (fewer than 20 employees) or without credible group coverage must enroll at 65. Those with large employer plans may delay, but comparing benefits, drug coverage, and total costs is essential to make the best decision. Understanding your options now ensures you avoid penalties and get the coverage that best aligns with your medical and financial needs.
