Small Businesses with 20 or Fewer Employees Must Enroll in Medicare

By Brian Krantz - February 28, 2023

medicare and employer coverage for small businesses

As a small business owner, you shoulder the crucial responsibility of providing health insurance to your employees. There’s a certain Medicare rule that applies to small businesses with a workforce of 20 or fewer employees. Understanding this rule is vital, as it dictates that any employee or their spouse becoming eligible for Medicare must enroll in Medicare Part A and Part B. The subsequent sections of this article will explain the complexities of this rule, focusing on the shift of your provided insurance to a secondary role, and offer useful resources to aid your understanding.

What is the Medicare Rule for Small Businesses?

Small businesses with a workforce of 20 or fewer employees fall under a specific Medicare rule. This rule dictates that when an employee, or their spouse, qualifies for Medicare, they are obliged to enroll in Medicare Part A and Part B. This transition means that if any of your employees or their spouses reach the age of 65, they need to participate in the Medicare program. Following enrollment, Medicare generally assumes the position of the primary insurer, while the insurance coverage you provide transitions to the role of a secondary payer. This rule is applicable to all categories of small businesses, be it corporations, partnerships, or sole proprietorships. Recognizing this shift from primary to secondary coverage is essential for businesses to ensure the smooth processing of insurance claims and to prevent unexpected expenses for their employees.

Why Do Small Businesses Need to Enroll in Medicare?

Enrolling in Medicare is a legal requirement for small businesses with 20 or fewer employees. If you fail to enroll in Medicare when required, you may face penalties and fines. Additionally, enrolling in Medicare can benefit your employees by providing them with additional healthcare coverage.

How Does Medicare Work with Other Types of Insurance?

If your small business provides healthcare coverage to your employees, Medicare will work with your coverage to provide additional benefits. However, if your employees are enrolled in Medicare, their Medicare benefits will be primary, and your coverage will be secondary. This means that Medicare will pay first, and your coverage will pay second.

Resources for More Information

The official Medicare website provides information on how Medicare works with other types of insurance, including Medicaid, employer coverage, and supplemental insurance. You can find the website at the following link

Medicare Interactive also has an article that explains how job-based insurance works when you turn 65 and become eligible for Medicare. You can find the article at the following link.

Frequently Asked Questions

Q: What if I have fewer than 20 employees?

A: If your small business has fewer than 20 employees, you are required to enroll in Medicare.

Q: What if I have more than 20 employees?

A: If your small business has more than 20 employees, you are not required to enroll in Medicare when an employee becomes eligible for the program.

Q: How do I enroll in Medicare?

A: You can enroll in Medicare by visiting the official Medicare website or by contacting a Medicare representative.


In conclusion, if you own a small business with 20 or fewer employees, it’s essential to understand the Medicare rule requiring enrollment when any employee becomes eligible. By enrolling in Medicare, you can avoid penalties and fines while providing your employees with additional healthcare coverage. It’s crucial to comply with this rule and ensure that you enroll in Medicare as soon as any employee becomes eligible. Don’t forget to refer to the resources provided in this article for more information on how Medicare works with other types of insurance and as always, don’t hesitate to reach out to the Medicare advisors at Plan Medicare for advice on your unique situation. 

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