How to Switch from Employer Coverage to Medicare Without Penalties

If you're approaching age 65 and still working—or covered under your spouse’s employer health insurance—you may be wondering how and when to switch to Medicare. Making the transition properly can help you avoid coverage gaps and late enrollment penalties. Here's a step-by-step guide to help you switch from employer coverage to Medicare without paying more than you have to.

Step 1: Understand When You’re Eligible for Medicare

You become eligible for Medicare at age 65. Your Initial Enrollment Period (IEP) is a 7-month window:

3 months before your 65th birthday
The month of your 65th birthday
3 months after your 65th birthday

If you're still working or have employer coverage through a spouse, you may qualify for a Special Enrollment Period (SEP) instead.

Step 2: Know If Your Employer Coverage Counts as “Creditable”

If you’re covered by group health insurance from an employer with 20 or more employees, it’s considered creditable coverage. That means:

You can delay Medicare Part B (and Part D) without penalty
You must enroll during an SEP after that coverage ends

If your employer has fewer than 20 employees, Medicare becomes your primary insurance, and you should enroll in Medicare at 65 to avoid penalties.

Step 3: Enroll During Your Special Enrollment Period (SEP)

Your SEP starts when you lose employer coverage and lasts for 8 months. You can:

Enroll in Medicare Part B without penalty
Enroll in Part D to avoid the late enrollment penalty

Important: The SEP does not apply to Medigap (Supplement) plans, which have their own enrollment rules.

Step 4: Decide Between Original Medicare and Medicare Advantage

When switching, decide which type of Medicare coverage fits your needs:

✅ Original Medicare (Part A & B) with optional Medigap and Part D coverage

✅ A Medicare Advantage (Part C) plan that combines Parts A, B, and usually D

Step 5: Coordinate the Transition

✅ Don’t cancel your employer coverage until your Medicare coverage begins

✅ Communicate with HR to time the switch smoothly

✅ Submit Form CMS-40B and CMS-L564 to enroll in Part B during an SEP

Final Thoughts

Switching from employer coverage to Medicare doesn’t have to be stressful. With the right timing and planning, you can avoid penalties, reduce your healthcare costs, and ensure continuous coverage.

Need help making the switch? Lindbergh and Associates can walk you through every step.

📞 Call us today or schedule a free consultation to transition to Medicare with confidence!