Medicare benefits start at age 65, but many people continue working past that age. That makes it important to understand how Medicare and employer coverage fit together.

Depending on your circumstances, Medicare is either the primary or the secondary insurer. The primary insurer pays any medical bills first, up to the limits of its coverage. The secondary insurer covers costs the primary insurer doesn’t cover (although it may not cover all costs). Knowing whether Medicare is primary or secondary to your current coverage is crucial because it determines whether you need to sign up for Medicare Part B when you first become eligible. If Medicare is the primary insurer and you fail to sign up for Part B, your eventual Medicare Part B premium could start going up 10 percent for each 12-month period that you could have had Medicare Part B but did not take it.

Here are the rules governing whether Medicare coverage will be primary or secondary:

• If your employer or your spouse’s employer has 20 or more employees, your employer’s insurance will generally be the primary insurer and Medicare will be the secondary payer. If your employer or your spouse’s employer has fewer than 20 employees, Medicare will generally be the primary insurer and your employer’s insurance will be the secondary insurer.
• If you are retired but still covered by your employer’s group health insurance plan, Medicare pays first and your former employer’s plan pays second.
• If you receive both Social Security Disability Insurance and Medicare and your employer has 100 or more employees, your employer’s insurance pays first. Some employers are part of a multi-employer plan; if at least one employer in that plan has 20 employees or more, the employer’s insurance pays first. If your employer has fewer than 100 employees, Medicare will pay first.
• If you have end-stage renal disease (ESRD) and are in the first 30 months of Medicare coverage of ESRD, your employer’s plan pays first. After the first 30 months, Medicare becomes the primary insurer. It does not matter how many employees your employer has.
• If you are self-employed and have a group health plan that covers you and at least one other person, Medicare pays first. Note that if you are self-employed, you may be able to deduct Medicare premiums from your income taxes by including the premiums in the self-employed health insurance deduction.
• If your employer’s insurance is the primary insurer, the employer must offer you and your spouse the same coverage that it offers to younger employees. It also cannot deny you coverage, cancel your coverage once you become eligible for Medicare, or charge you more for premiums, deductibles, and co-pays.