Employers just warned that benefit costs could jump about 8.2 percent next year, and workers usually feel that first in their paycheck deduction. If you are 60 to 64 and still on a group plan, that number is not abstract. It is your next open enrollment.
Fierce Healthcare reported on a Marsh survey in which employers projected that roughly 8.2 percent increase in health benefit costs for 2027. You can read the coverage here: Employers could see 8.2% benefits costs spike in 2027. I am not going to rehash the survey. I want to talk about what it means for you.
Here is the short version. When employer costs go up, companies rarely eat the whole thing. They pass some along. That shows up as a bigger premium share, a higher deductible, a narrower network, or a spouse surcharge. And for people in their early 60s, that squeeze arrives right when Medicare becomes an option worth pricing out. Not automatically better. Worth pricing out.
I talk to people every week who assumed they had to stay on the work plan until they retired. Some did. Some were paying more than they needed to for a year or two. The only way to know which one you are is to run your own numbers.
Can you leave an employer health plan for Medicare while you are still working?
Yes, in most cases you can. If you are 65 or older and eligible for Medicare, you generally do not have to stay on your employer plan. You can enroll in Medicare and drop the group coverage, even if you keep working full time.
That surprises people. There is a widespread belief that Medicare is something that happens to you the day you retire. It is not. Medicare eligibility is tied to age and work history, not to whether you clock out for the last time.
The flip side matters too. If your employer plan is strong and your share of the premium is low, staying can be the right call. A large employer often covers a big chunk of the cost. Medicare has its own premiums and its own cost sharing. Nobody hands you anything for nothing.
So this is a math problem and a coverage problem, not a rule problem. The rule allows you to switch. Whether you should is a different question.
What actually changes when you move from a group plan to Medicare?
The biggest change is that coverage stops being one card and becomes a set of decisions you make yourself.
On a group plan, someone in HR picked the network, the drug list, and the out of pocket maximum. You picked a tier and moved on. With Medicare, you choose your own path. Original Medicare with a Medigap policy and a standalone drug plan is one road. A Medicare Advantage plan that bundles things together is another. They behave very differently.
A few real differences to think about:
- Family coverage goes away. Medicare is individual. If your spouse or a dependent is on your work plan, dropping it affects them. That alone stops a lot of people from switching early, and it should.
- Drug coverage moves. Your employer plan probably includes prescriptions. Under Medicare, drug coverage comes through Part D or through an Advantage plan that includes it. The formulary rules are different, and so is the structure of what you pay across the year. Our page on Medicare drug plan help walks through how that works.
- Networks change. Some Medicare paths let you see any provider who accepts Medicare. Others use a defined network. Neither is automatically better. It depends on your doctors and your travel habits.
- Dental, vision, and hearing are handled differently. Group plans often bundle these. Under Medicare they are usually separate decisions.
None of this is a reason to stay or go. It is a reason to compare carefully instead of guessing.
What is the one mistake that costs people the most?
Timing. Specifically, misreading how long you have to enroll after group coverage ends, and assuming COBRA counts as active employer coverage. It generally does not for Part B purposes.
Here is the piece I want you to hold onto. If you delay Medicare because you have coverage through active employment, there is a special enrollment window that opens when that employment or that coverage ends. It does not last forever. And retiree coverage or COBRA is treated differently than coverage tied to a job you are still working.
People get burned in two ways. One, they enroll late and face a lasting premium penalty on Part B. Two, they end up with a gap in coverage while they wait for an enrollment period to come around. Both are avoidable. Neither is rare.
Employer size matters here as well. Whether Medicare or the group plan pays first depends in part on how many employees the company has. Small employers and large employers are handled differently, and getting that backwards can leave claims unpaid. If you work for a small company, this is worth a conversation before you decide anything.
If the calendar is where you feel foggy, start with our plain-language breakdown of Medicare enrollment periods. It lays out which window applies to which situation.
Does an HSA change the decision?
Yes, and this one catches high earners in particular. Once you enroll in any part of Medicare, you can no longer contribute to a health savings account.
You can still spend what is already in the account. You just cannot add to it. If you are maxing out an HSA every year and your employer contributes as well, that has real value that has nothing to do with your premium. Losing it may outweigh the savings from switching.
There is also a lookback rule tied to Part A enrollment when you claim Social Security. It can make contributions in the months before enrollment a problem. If you are still funding an HSA and thinking about Medicare, get specific advice before you sign anything. This is one of the few places where a small mistake creates a tax headache.
How do you compare the two options honestly?
Stop comparing premiums. Compare your realistic total for a year, including the medicines you actually take and the doctors you actually see.
Here is the process I use with people:
- Write down your true employer cost. Your monthly deduction times twelve, plus the deductible you would realistically hit, plus any spouse surcharge. Ask HR for the 2027 numbers as soon as they exist.
- Confirm whether your drug coverage is creditable. Your benefits department can tell you in writing. This matters for future Part D decisions.
- List your prescriptions by name and dose. Not “a blood pressure pill.” The exact drug. Drug costs swing the comparison more than anything else.
- List the doctors and facilities you will not give up. Then check them against any Medicare option you are considering.
- Price both Medicare roads. The Medigap route and the Medicare Advantage route produce different monthly costs and different exposure when you get sick. Look at both.
Then compare the totals. Sometimes Medicare wins clearly. Sometimes the group plan wins clearly. Often it is close, and the tiebreaker is something personal like whether your spouse needs the coverage or whether you travel half the year.
Where does this advice not apply?
It does not apply if you have a spouse or child depending on your group plan and no good alternative for them. It does not apply if your employer pays nearly all of your premium. And it does not apply if you are under 65 and not otherwise Medicare eligible, because the rising cost is real but Medicare is not your fix yet.
I will also say this plainly, even though it does not help me. If your work plan is generous and you are healthy, staying put may be the cheaper answer. Rising costs do not automatically make Medicare the better deal. They make it worth checking. Those are two different things.
One more honest note. There is a health question issue on the Medigap side. Outside of certain guaranteed issue situations, insurers may ask about your health when you apply. That can affect what is available to you later. It is a reason to understand your timing before you assume you can switch roads whenever you want.
What should you do in the next month?
Find out whether your current setup has a weak spot before your employer announces next year’s rates.
We built a short self check for exactly this moment. It takes about three minutes and it flags the common gaps: drug coverage that will not hold up, timing that could trigger a penalty, and coverage decisions that quietly cost more than they should. Take the Medicare Clarity Score and find out in three minutes if your plan has hidden risks.
If you would rather just talk it through, call me at 512-844-3983. I am Scott Bowling, I am independent, I work with people in multiple states, and there is no call center on the other end of that number. If the answer is that you should stay on your work plan, I will tell you so.
Trusted SR Solutions is not affiliated with or endorsed by the federal government or the Medicare program. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.