COBRA and Medicare: If You Don’t Know the Rules You Can Get Bitten
What is COBRA?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act and requires employers with 20 or more employees to offer an 18-month continuation of group health coverage.
Eligible employees, spouses, and dependent children must be offered an option of continuous health coverage at group rates after their group insurance ends due to loss of employment or other reasons that may cause health coverage to be terminated. COBRA coverage typically costs an individual more than his previous coverage, as the former employer is no longer paying for any part of the COBRA insurance.
COBRA is health insurance, but some plans will also offer partial drug coverage, dental, and vision care. COBRA is not insurance or disability insurance.
COBRA and Medicare
In most cases, people who work after turning age 65 and receive health insurance coverage through their own or spouse’s insurance can delay enrollment into Medicare without paying the penalty. That is not the case with COBRA
When you have health coverage under COBRA through a former employer or a spouse’s former employer and become eligible for Medicare, in that case, you will have eight months to sign up for Medicare without paying a late enrollment penalty.
Here is where it gets a little tricky. If you are currently covered under Medicare and then become eligible for COBRA, you are eligible to enroll in COBRA. You must keep Medicare because Medicare will be the primary insurance, and COBRA will be your secondary insurance.
If you are covered under COBRA insurance and become eligible for Medicare, you have eight months to sign up for Part B without a penalty.
Even though you have eight months to sign up for Medicare, I recommend not waiting that long as, in many cases, Medicare costs less than COBRA. You should Compare Medicare costs to the COBRA costs in order to make an informed decision.
If you have Medicare A & B and become eligible for COBRA, you must be allowed to join a COBRA plan.
Depending on your COBRA plan, you may drop the medical coverage while keeping the dental and vision care. You will need to contact the plan’s administrator to find out if this is possible.
If you would like to learn more about COBRA, please see the links below.
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