Medicare and COBRA (Consolidated Omnibus Budget Reconciliation Act) are two separate programs that provide health insurance coverage in the United States. COBRA allows individuals to keep their employer-sponsored health insurance after experiencing a qualifying event like job loss or reduced hours, while Medicare provides health coverage for individuals aged 65 and older, as well as some younger people with disabilities or specific diseases. Understanding how Medicare coordinates with COBRA can be an arduous task due to various rules and timelines involved.
Firstly, it’s important to know that if you already have Medicare when you become eligible for COBRA, you can have both. However, Medicare will be the primary payer, and COBRA will be the secondary payer. In other words, Medicare will pay its share of the Medicare-approved amounts for your covered health care costs. Then, your COBRA coverage may pay some or all of the remaining costs. This system can be beneficial, as it often results in lower out-of-pocket utilization costs.
However, if you become eligible for Medicare after you’re already on COBRA, your COBRA coverage will usually end on the date you enroll in Medicare. Therefore, it’s crucial to enroll in Medicare as soon as you’re eligible, to avoid a gap in coverage. If you are past the age of 65 when you leave your job, you generally have an eight-month Special Enrollment Period (SEP) to sign up for Medicare Part B without a penalty, starting the month after your employment ends or your group health coverage ends, whichever happens first.
People often wonder if they can delay Medicare enrollment by continuing COBRA. It’s important to understand that COBRA does not count as job-based health insurance. This means that COBRA does not allow you to avoid or delay the Medicare Part B penalty, and you cannot delay enrollment into Medicare Part B just because you have COBRA. If you don’t enroll in Medicare Part B when you’re first eligible and decide to enroll later, you may have to pay a late enrollment penalty for as long as you have Part B.
On the subject of prescription drug coverage, if your COBRA coverage includes creditable prescription drug coverage, you will have a two-month Special Enrollment Period to join a Medicare Part D prescription drug plan without penalty when your COBRA coverage ends.
Moreover, under the COBRA law, if you were eligible for both COBRA and Medicare, but you elected COBRA and delayed enrollment in Medicare Part B or Part D, COBRA may stop covering you once you become entitled to Medicare. It is advisable to check with your employer or COBRA administrator before making a decision.
In conclusion, while COBRA can provide valuable health coverage for individuals in transition periods, it’s essential to understand how it works in tandem with Medicare. In many cases, enrolling in Medicare when first eligible can help avoid penalties, loss of coverage, and high out-of-pocket costs.
If you have any questions about how Medicare coordinates with COBRA or any other Medicare questions, or if you just need help enrolling, please connect with one of our Member Agents. There are never any fees for their educational or enrollment services!