Enrollment

Working at a Small Employer (Under 20 Employees) and Medicare in Washington

If you're 65 or older and covered through a Washington employer with fewer than 20 employees, Medicare usually pays first and the employer plan pays second, under the federal Medicare Secondary Payer rules. That means you generally need Part A and Part B at 65 even if you keep the employer plan, or you can be left with bills neither one pays.

By the Benefits Life Editorial Team, licensed insurance agents · Reviewed November 9, 2026

The 20-employee threshold and why it matters

Federal law (the Medicare Secondary Payer rules) draws the line at 20 employees for people 65 and older who have coverage through their own or a spouse's current job:

20 or more employees: the employer's group health plan pays first and Medicare pays second. You can usually delay Part B without a penalty while you or your spouse keep working there.
Fewer than 20 employees: Medicare usually pays first. The employer plan pays second, covering some of what Medicare doesn't. Plan to sign up for Part B at 65.

This distinction catches many people. Someone who moves from a large Seattle company to a small Washington engineering firm may assume the coverage works the same way. It doesn't: at the small firm, they need Part B as soon as they're 65.

The threshold is different for people under 65 who have Medicare because of a disability: there, the employer plan pays first only if the employer has 100 or more employees. See Medicare under 65 in Washington.

What "primary" actually means

Primary insurance pays first. Secondary insurance pays some of what the primary didn't. If Medicare should be primary but you're not enrolled in Part B:

Your employer plan may pay as if Medicare had paid first, covering only its secondary share
Medicare pays nothing because you're not enrolled
You can be left with the part Medicare would have paid

Medicare.gov warns about exactly this: if your employer has fewer than 20 employees and you don't sign up for Part B, your employer plan may not pay for your care. Check with your benefits administrator before you decide.

How employees are counted

The employer plan pays first only if the employer had 20 or more employees on each working day of at least 20 calendar weeks in the current or the preceding calendar year. Full-time and part-time employees both count. Self-employed people in the plan don't count.

Some practical situations:

Multiple locations. The count is for the whole employer, not just your office. A 12-person Washington branch of a large national company is usually under the large-employer rules.
Seasonal businesses. The test looks at weeks with 20 or more employees in the current or preceding year, so a busy season can put an employer over the line. Ask HR.
Self-employment / sole proprietorship. If you're self-employed and don't have group coverage, none of this applies: your individual coverage doesn't let you delay Part B.
Multi-employer plans. Some industries (construction, hospitality) use multi-employer or union plans. If any participating employer has 20 or more employees, the plan generally pays first for everyone, unless the plan asked Medicare for a small-employer exception for your employer.

What to do if you're at a small employer and turning 65

Enroll in both Part A and Part B during your Initial Enrollment Period (the 7 months around your 65th birthday month). Don't delay either one unless the plan confirms it pays first.
Tell your employer plan's administrator. Let them know you now have Medicare so they process claims as the secondary payer.
Decide on Part D. If your employer plan has creditable prescription drug coverage (the plan must tell you each year), you may not need a separate Part D plan now. If it doesn't, join a Part D plan to avoid a late enrollment penalty.
Consider Medigap. Once you have Part B, your 6-month Medigap open enrollment period starts. If the employer plan adds little on top of Medicare, a Medigap policy may be another way to cover what Medicare doesn't. See Medigap in Washington.
Ask about retiree coverage. Some small employers offer retiree health benefits. Find out before you make decisions.

Should I drop my small-employer plan when I get Medicare?

It depends on:

Your share of the premium. Compare what you pay for the employer plan with what it adds on top of Medicare (mostly the 20% Part B coinsurance and the deductibles), and with the cost of other ways to fill those gaps.
Family coverage. If your employer plan covers a spouse who isn't yet 65, dropping it may leave them without coverage.
Drug coverage. Compare the plan's drug coverage with Part D for the medicines you take.
Other benefits. Dental, vision or other coverage in the employer plan might tip the scale.

Ask whether you can rejoin the employer plan later if you drop it now.

The COBRA wrinkle

If you leave a small employer at 65 or older and elect COBRA, still sign up for Part B. COBRA doesn't let you delay Part B, and once you have Medicare, Medicare pays first and COBRA pays second. People who rely on COBRA past 65 often face a Part B late enrollment penalty when they finally sign up.

The same is true for retiree coverage from a former employer: it doesn't let you delay Part B.

Common Washington small-employer scenarios

Scenario 1: 65-year-old at a 15-person tech startup in Bellevue. Medicare usually pays first. Enroll in Part A and Part B at 65. The employer plan pays second. Compare keeping it with dropping it for other coverage.

Scenario 2: 67-year-old part-time at a 12-person law firm in Spokane. The same rules apply whether you work full-time or part-time. Medicare usually pays first. Enroll on time.

Scenario 3: 65-year-old sole proprietor in Olympia with individual health insurance. There's no group plan, so the employee-count rule doesn't apply and Medicare becomes your main coverage. Once you have Medicare, you generally can't keep getting premium tax credits for a Washington Healthplanfinder plan, so plan to end it when Medicare starts.

Scenario 4: 65-year-old at a 50-person Seattle company. Large-employer rules apply. You can usually delay Part B without a penalty until the job or coverage ends. The employer plan pays first while you work. See Working past 65.

Penalties if you get this wrong

If you should have signed up for Part B at 65 (because you're at a small employer) but didn't:

Late enrollment penalty: 10% of the standard Part B premium added for each full 12-month period you could have had Part B but didn't. You generally pay it for as long as you have Part B.
Limited times to sign up: if you missed your Initial Enrollment Period and don't qualify for a Special Enrollment Period, you usually have to wait for the General Enrollment Period (January 1 to March 31 each year). Coverage starts the month after you sign up.
Coverage gaps: until you're enrolled, you can face bills that no insurer pays.

See Medicare late enrollment penalties in Washington.

Resources for getting this right

Your employer's HR or benefits administrator, for your employer's size and how its plan pays with Medicare
Social Security, to sign up for Part A and Part B: 1-800-772-1213 or ssa.gov
Medicare's Benefits Coordination & Recovery Center, for questions about which coverage pays first: 1-855-798-2627 (TTY 1-855-797-2627)
1-800-MEDICARE (1-800-633-4227) and Medicare.gov
A licensed insurance agent with Benefits Life, at (206) SENIORS (206-736-4677), TTY 711, at no cost to you, or an independent licensed insurance agent near you. You can also see plans in your ZIP code.

Sources

Frequently asked questions

If I work at a small employer in Washington, do I need to enroll in Medicare at 65?

Usually yes. If your employer has fewer than 20 employees, Medicare generally pays first once you're 65, even while you're working and covered by the employer plan. Sign up for Part A and Part B during your Initial Enrollment Period unless your benefits administrator confirms in writing that the plan pays first, as it can in some multi-employer plans.

How do I know if my employer counts as small for Medicare?

Under the Medicare Secondary Payer rules, the employer plan pays first only if the employer had 20 or more employees on each working day of at least 20 calendar weeks in the current or the preceding calendar year. Full-time and part-time employees both count. The count is for the whole employer, so ask HR or the plan's benefits administrator.

My small-employer plan pays for my care now. Why do I need Medicare?

Because once you're 65, Medicare is supposed to pay first. Medicare.gov warns that if you don't sign up for Part B when Medicare is primary, your employer plan may pay little or nothing of what Medicare would have covered. You can be left with large bills even though you have coverage.

Should I drop my small-employer health plan once Medicare starts?

It depends. Compare what you pay for the employer plan with what it adds on top of Medicare, and weigh other factors: whether it covers a spouse under 65, how its drug coverage compares with Part D, and any dental or vision coverage. Ask the plan before you drop it whether you can get back in later.

Does COBRA from a small employer let me delay Medicare?

No. COBRA doesn't let you delay Part B. If you're 65 or older and leave a small employer, sign up for Part B; Medicare pays first and COBRA pays second. Relying on COBRA alone past 65 can lead to a Part B late enrollment penalty when you do sign up.

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