Questions your employees may be asking about Social Security and Medicare

As employees approach retirement age, the questions they ask you, as their HR or benefits manager, become more complex, especially around Social Security and Medicare. These aren’t just casual questions either. They’re the kind of topics that impact financial planning, healthcare decisions, and peace of mind.

To help you stay ahead of the curve and better support your workforce, here are six common questions employees may ask about working and Social Security, Medicare, and navigating the transition to retirement.

Six Social Security and Medicare questions your employees may be asking

If you’re in HR or manage employee benefits, you know how overwhelming retirement planning can be for your employees. Social Security and Medicare aren’t just government programs. They’re critical pieces of your employees’ future security. And the rules around working and obtaining Medicare or Social Security benefits are complicated, to say the least.

That’s why employees come to you with questions. They want to know when to apply, how working affects their benefits, and how to avoid penalties. The good news? A little education goes a long way in helping them make wise choices. Here are six questions your employees may be asking and how you can help answer them with confidence.

1. Can I keep working and still collect Social Security?

Yes, and this is something many do. However, the rules are different depending on the employee’s age.

If an employee starts collecting Social Security before reaching full retirement age (FRA), there’s an earnings limit. In 2025, that limit is $23,400. For every $2 earned over the limit, $1 in benefits will be withheld. This reduction affects the individual’s benefit and any family members collecting based on their work record.

If an employee starts collecting Social Security and reaches their FRA that year, the earnings limit is $62,160 for the months before reaching FRA. The reduction is $1 in benefits for every $3 earned above this limit. Then, once FRA is reached, the earnings test disappears. Your employees can earn as much as they’d like without reduced benefits. If benefits were reduced before FRA due to the earnings test, those reductions would be factored into future payments, meaning their benefit amount could increase.

What this means for you: Employees might not realize they can “start now and catch up later.” Explaining that withheld benefits aren’t lost forever can ease concerns about starting Social Security early while still working.

2. What happens to my Social Security if I retire mid-year?

Some employees retire partway through the year, after already earning more than the annual earnings limit. The good news? There’s a special monthly earnings test for the first year of retirement.

In this scenario, Social Security considers monthly income instead of the yearly total. If an employee earns less than $1,290 per month (1/12 of the $23,400 annual limit), they can still receive benefits for those lower-income months. This even applies if their annual earnings are higher overall.

For example, if Mr. Jones retires at 62 on July 31 after earning $45,000 through July, but then takes a part-time job earning only $500 per month from August onward, he’s still eligible to receive full benefits August through December.

What this means for you: Employees often assume they’ve disqualified themselves from benefits because of earlier earnings. Helping them understand the monthly test can make a big difference in their retirement income strategy.

3. When should I enroll in Medicare if I’m still working?

Medicare coverage can start the first day of the month when the employee turns age 65. When to enroll depends on the size of your company and whether a group health plan covers the employee.

If you have 20 or more employees or the employee (or their spouse) is still working and covered by your group plan, they may want to delay enrolling in Medicare Part A, which is free for most people, and Medicare Part B, which has a monthly premium. In this case, your employer-sponsored coverage is the primary payer, and Part B would likely offer minimal added value.

But if your company has fewer than 20 employees, the rules change. Medicare is typically the primary payer, and delaying enrollment could lead to lapses in coverage or penalties. So, it’s vital to check the employer health plan to determine when the employee needs to enroll. Employer-based coverage might not pay for health services without the employee having Part A and Part B.

Also, suppose an employee enrolls in Part B and waits more than six months before purchasing a Medigap (Medicare Supplement) plan. In that case, they will miss their one-time open enrollment period, potentially affecting the Medigap plan they can enroll in.

What this means for you: Encourage employees to talk with you, their financial advisor, or an insurance broker about Medicare timing. The wrong choice can cost them thousands in premiums or leave them with gaps in coverage.

4. What about my HSA? Can I keep contributing if I delay Medicare?

Employees with high-deductible plans often contribute to health savings accounts (HSAs) well into their 60s. However, once Medicare coverage begins, even if Part A, HSA contributions must stop.

Here’s the tricky part: Medicare Part A coverage can retroactively begin up to six months from the date of application. So if any employee applies for Medicare in June, coverage may backdate to January, triggering a tax penalty for any HSA contributions made in that time.

To avoid this, employees should stop contributing to their HSA at least six months before enrolling in any part of Medicare.

What this means for you: HSAs are a valuable retirement planning tool, but timing is everything. Ensure your employees know the six-month buffer to prevent costly tax penalties.

5. What’s the cost of delaying Medicare Part B?

For employees age 65 or older, delaying Medicare Part B after employment ends and missing the eight-month special enrollment period leads to permanent penalties. While COBRA coverage that typically lasts for 18 months can be elected, employees age 65 or older can use it for only up to eight months because Medicare doesn’t consider COBRA true health insurance. If this window is missed, the penalty is 10% for each 12-month period (prorated for months) that an individual could have enrolled but didn’t. This penalty is added to the monthly Part B premium for life.

For example, in 2025, the standard Part B monthly premium is $185. If someone delays enrollment by two years, they’ll owe a 20% penalty, raising their premium to $222 per month.

What this means for you: Employees who assume they can “wait and see” may set themselves up for higher costs later. Tell them about the rules for special enrollment periods and COBRA (which under Medicare is not considered health Insurance) so they don’t get a permanent penalty.

6. Can I delay taking Social Security to get a bigger benefit?

Yes, and this is often a smart move for employees who don’t immediately need the income. If they delay collecting Social Security beyond full retirement age, their monthly benefit increases thanks to what’s called delayed retirement credits (DRCs). These credits add 8% per year (prorated for months) to the benefit amount, up until age 70.

It’s also possible to apply for benefits after FRA and ask for up to six months of retroactive payments. However, doing this forfeits some of the delayed credits, so it’s worth discussing the trade-offs with a financial advisor.

What this means for you: Many employees assume they must start Social Security as soon as they stop working. Helping them understand the financial upsides of waiting, even a year or two, can shift their entire retirement picture.

Help your employees make smarter retirement decisions

These kinds of questions are becoming more common as the workforce ages. Employees want to understand their options, avoid penalties, and maximize their benefits. The problem? The rules for working and Social Security or working and Medicare aren’t simple. And misinformation can lead to expensive mistakes.

That’s where you, their HR or benefits manager, come in. When you’re equipped with up-to-date, easy-to-understand resources, you become a trusted guide in helping your team navigate the transition to retirement.

Want to offer resources like this to your employees?

Our Social Security and Medicare booklets are designed to take the guesswork out of retirement planning. Whether your team is approaching age 62 or nearing Medicare eligibility at age 65, these clear and concise guides help answer their biggest questions. They also help prevent mistakes that lead to delayed benefits or unexpected costs.

Call us at 855-286-5302 or e-mail us at surveys@mercer.com to help your employees start planning for retirement.