Still Working Past 65? Employer Health Costs Are Jumping in 2027 – Here’s How to Compare Them to Medicare

If you’re 65 or older and still on your employer’s health plan, there’s a good chance you’ll open your company’s benefits packet this fall and wince. Employer health costs are heading for their biggest one-year jump in more than two decades, and much of that increase is expected to land in workers’ paychecks.

For most employees, the only question is which of the company’s plans to pick. But if you’re Medicare-eligible, you have a choice most of your coworkers don’t: you may be able to leave the employer plan and move to Medicare instead. For some people, that switch saves real money. For others, staying put is the smarter move. Here’s how to tell the difference.

What’s Actually Changing

A new national survey from benefits consulting firm Marsh (formerly Mercer), covering more than 1,800 U.S. employers, projects that the cost of employer health coverage will rise about 8.2% per employee in 2027. That would be the largest increase since 2003, and the fifth straight year of above-normal growth. Without plan changes, employers expect costs would have climbed closer to 11%.

Employers aren’t absorbing all of it. The same research found that 59% of employers plan cost-cutting changes for 2027, such as higher deductibles, and roughly two-thirds of large employers expect to raise the share of premiums employees pay. In plain terms: many workers will see bigger paycheck deductions and higher out-of-pocket costs when they use care.

Why This Is Happening

Marsh points to a mix of long-running and newer pressures: expensive new treatments, hospital system consolidation, heavy use of GLP-1 weight-loss drugs (estimated to add a full percentage point to 2027 cost growth on their own), more aggressive billing, and a rise in very high-cost claims for cancer and rare-disease therapies.

Medicare isn’t immune to rising costs either, but for 2027 its increases look more modest. The Medicare Trustees project the standard Part B premium will rise from $202.90 a month in 2026 to about $209.50 in 2027, roughly a 3% increase. (CMS typically confirms the official number in October or November.)

Why This Matters for You

Here’s a simple rule of thumb: if your payroll deduction for employer health coverage is well above about $200 a month, it’s worth running the numbers on Medicare.

Why $200? That’s roughly what the standard Part B premium costs. Part A is premium-free for most people who have worked at least 10 years. So Part B is the baseline cost of Medicare. From there, your total depends on how you build your coverage:

• Original Medicare plus a Medicare Supplement (Medigap) plan plus a Part D drug plan: higher monthly premiums, but very predictable costs and freedom to see any provider that accepts Medicare.
• A Medicare Advantage plan: many have low or even $0 premiums beyond Part B, with a yearly out-of-pocket maximum, but you’ll generally use a provider network.

Don’t compare premiums alone. If your employer is moving you to a higher-deductible plan in 2027, factor in what you’d actually spend on doctor visits, prescriptions, and hospital care over a year. That’s often where Medicare comes out ahead.

A few situations where staying on the employer plan often makes more sense:

• Your employer plan also covers a spouse or dependent under 65 who would lose coverage if you leave.
• Your employer pays most of the premium and your share is low.
• You’re contributing to a Health Savings Account (HSA). Once you enroll in any part of Medicare, including Part A, you can no longer make HSA contributions.

Working past 65 Medicare enrollment rules can feel like fine print — until this year, when they could save you real money. If you’re 65 or older and still on your employer’s health plan, there’s a good chance you’ll open your company’s benefits packet this fall and wince. Employer health costs are heading for their biggest one-year jump in more than two decades, and much of that increase is expected to land in workers’ paychecks.

1. Find out whether Medicare or your employer plan pays first. If your employer has 20 or more employees, the group plan generally pays first, and you can delay Part B without a late penalty. If your employer has fewer than 20 employees, Medicare usually pays first, and you typically need Parts A and B to be fully covered. This is the single most important thing to confirm with HR.
2. Get your real 2027 numbers. When your employer’s open enrollment materials arrive, write down your monthly premium share, deductible, and out-of-pocket maximum for the plan you’d choose.
3. Price out your Medicare options side by side. Include Part B, any Medigap or Medicare Advantage premium, and Part D drug costs. Note that the Part D out-of-pocket cap is $2,400 for 2027. If your income is higher, check whether an IRMAA surcharge would apply to your Part B and Part D premiums.
4. Time the switch carefully. When you leave employer coverage (or the job), you have a Special Enrollment Period of 8 months to sign up for Part B without penalty. To avoid a gap, it generally works best to sign up so Part B starts the day after your employer coverage ends. Your Medigap open enrollment period, when insurers can’t turn you down or charge more for health conditions, begins when your Part B starts and lasts six months. It only happens once, so it’s worth planning ahead.
5. Keep your paperwork. Hold on to proof of your employer coverage and confirmation that your drug coverage was “creditable.” Medicare may ask for it to waive late-enrollment penalties.

Keep in mind that the fall Medicare Annual Enrollment Period (October 15 – December 7) isn’t the window that applies when you’re leaving employer coverage. Your timing is based on when that coverage ends, which is why it helps to plan ahead.

Let’s Run the Numbers Together

This decision is personal, and the right answer depends on your employer, your health, your prescriptions, and your family. At Burke Insurance Group, we’ll help you compare your 2027 employer plan against your Medicare options side by side, at no cost and no pressure. Reach out anytime for a free consultation.

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.