Eligibility for Medicare begins at age 65, but you can actually sign up before then. Specifically, your initial Medicare enrollment window begins three months before the month of your 65th birthday, and it ends three months after that month. All told, you get seven months to enroll in Medicare and secure health coverage. But what if you're still working by the time you're allowed to sign up for Medicare? Should you enroll, or should you stick with your employer's plan?

Normally, enrolling late in Medicare puts you at risk of getting hit with penalties on your Part B premiums. But if you're covered by a group health plan at work with at least 20 employees on it, that penalty won't apply. As such, you should ask yourself these questions to see whether it pays to sign up for Medicare or keep the group health coverage you're entitled to.

Medicare enrollment form

Image source: Getty Images.

1. How generously subsidized are my employer plan premiums?

Though Medicare Part A, which covers hospital care, is free for most enrollees, Part B, which covers outpatient care, is not. As such, it pays to compare your premium costs under Medicare with what you pay for your employer plan. The standard Part B premium is $144.60 a month right now, and it tends to rise from year to year. Many companies subsidize health insurance premiums generously for employees, and some even pay those premiums entirely. See which option leaves you paying more for premiums before making the call.

2. How costly is my employer plan outside of premiums?

Your premiums are only one expense you'll bear in the course of having health insurance. You'll also need to deal with deductibles, copays, and coinsurance, and that's where it pays to run the numbers and see whether your employer plan comes in cheaper than Medicare. In 2020, Medicare Part B comes with an annual deductible of $198. Meanwhile, your deductible per hospital stay under Part A is $1,408. Compare these numbers to what your employer plan charges to get a more comprehensive cost comparison.

3. Am I still contributing to a health savings account?

Putting money into a health savings account, or HSA, is a good way to save serious money on taxes, all the while setting money aside for retirement you can use for healthcare purposes. But one thing you should know is that Medicare and HSAs don't mix, so once you enroll in Medicare, you'll no longer be eligible to contribute to an HSA. Now to be clear, you can still use your existing HSA funds once you sign up for Medicare; you just can't add to that account. But you'll need to decide if losing the option to fund an HSA and reap tax savings is worth getting Medicare coverage.

What's the right call for you?

When you have health coverage through work, delaying Medicare can be tempting. Or, the opposite may hold true – you may be inclined to enroll in Medicare and use it to replace your existing coverage But remember, a third option may exist, and it's to have both employer and Medicare coverage simultaneously. If you sign up for Part A alone, you won't pay for your premiums, but you'll have Part A as a secondary payer for hospital care, and it may pick up the tab for certain costs your primary insurance doesn't. If you go this route, you'll still lose the option to fund an HSA, but you'll have more comprehensive coverage.

Technically, you can also have Part B and employer coverage at the same time, but given the potential costs involved, that may not be necessary. Ultimately, it pays to run through different coverage scenarios and see what makes the most sense for you.