If you have COBRA health coverage when you are nearing age 65, you may be wondering whether you can keep it instead of enrolling in Medicare. The answer can depend on your situation, but this is an area where timing matters a great deal.
COBRA is temporary health coverage that may be available after you leave a job or lose employer-sponsored coverage. Medicare is federal health insurance that generally begins around age 65 for eligible people. You may be able to have both at the same time, but COBRA does not work the same way as coverage from an active employer.
Can You Keep COBRA When You Enroll in Medicare?
You may be able to keep COBRA after you enroll in Medicare, depending on when your COBRA coverage began and the rules of your former employer’s plan. However, keeping COBRA may not always be the best choice.
In many situations, Medicare becomes the primary payer after you turn 65 and enroll. This means Medicare generally pays its share first, while COBRA may pay second. If you have COBRA but do not enroll in Medicare when Medicare should be primary, COBRA may pay less than you expect or may not pay some costs at all.
For this reason, it is important not to assume that COBRA can simply replace Medicare after age 65. A benefits administrator can explain the plan’s rules, but you may also want to review your Medicare enrollment options carefully.
Does COBRA Let You Delay Medicare Part B?
This is one of the most important questions for people approaching 65. Generally, COBRA does not allow you to delay Medicare Part B without possible consequences.
A Special Enrollment Period for Part B is generally available when you or your spouse has coverage from current active employment. COBRA is continuation coverage after employment ends. It is not usually considered coverage based on current employment for this purpose.
If you delay Part B because you have COBRA, you may not qualify for the Special Enrollment Period you expected. You could have to wait for the Medicare General Enrollment Period to sign up for Part B. This may create a gap in coverage, and a late enrollment penalty may apply in some cases.
The timing can be especially confusing if you started COBRA shortly before turning 65. In many cases, enrolling in Medicare Part B when first eligible can help you avoid a future coverage problem.
What if You Are Still Working at 65?
If you are still working and have health insurance through your current employer, your choices may be different. You may be able to delay Part B if the employer coverage qualifies as coverage from active employment.
The size of the employer can matter. For example, when an employer has 20 or more employees, the employer plan may generally pay first for someone age 65 or older. When an employer has fewer than 20 employees, Medicare may generally be expected to pay first.
If Medicare should be primary and you delay Part B, your employer plan may not pay all of the costs that Medicare would have covered. Before delaying Part B, consider asking your employer’s benefits department these questions:
- Is my coverage based on current active employment?
- How many employees does the company have?
- Will the employer plan pay first or second after I turn 65?
- Is the prescription drug coverage considered creditable for Medicare Part D?
- What happens to my coverage if I retire or switch to COBRA?
How Long Can COBRA Last After Medicare Starts?
COBRA coverage is temporary. It often lasts for a limited period, although the exact length can vary based on the reason you qualified, the plan rules, and other circumstances.
If you become entitled to Medicare before electing COBRA, your spouse or dependents may sometimes be able to continue COBRA coverage after your own coverage ends. Their continuation period can be different from yours. This is an important detail for couples to discuss with the employer plan administrator.
Starting Medicare after you already elected COBRA can also affect how long your COBRA coverage lasts. Because these rules can vary, it is wise to get the details in writing from the plan administrator instead of relying on a general answer.
What About Medicare Part D and COBRA Drug Coverage?
COBRA may include prescription drug coverage. But having drug coverage through COBRA does not automatically mean you can safely delay Medicare Part D.
To delay Part D without a possible late enrollment penalty, your drug coverage generally needs to be considered creditable coverage. Creditable means the coverage is expected to pay, on average, at least as much as standard Medicare Part D prescription drug coverage.
Your COBRA plan should send a notice telling you whether its prescription coverage is creditable. Keep that notice in a safe place. You may need it later if you enroll in Part D and want to show that you had qualifying drug coverage.
Even if COBRA drug coverage is creditable, it may not fit your needs as well as a Part D plan. Drug lists, pharmacy networks, deductibles, and premiums can vary by plan and carrier. Reviewing your medications before making a decision may help.
How Does COBRA Affect Medicare Supplement Coverage?
If you choose Original Medicare, you may also consider a Medicare Supplement insurance plan, often called Medigap. A Medigap plan can help pay some of the out-of-pocket costs left by Original Medicare.
Your one-time Medigap Open Enrollment Period generally begins when you are both age 65 or older and enrolled in Part B. During this period, you may have important protections when buying a Medigap plan. Delaying Part B because you have COBRA may also delay the start of this enrollment period.
In many states, applying for Medigap after that initial period can involve medical underwriting, unless you have a guaranteed-issue right. Acceptance and pricing can vary by carrier, plan, health history, and state.
A Simple Medicare and COBRA Checklist
Before you decide how to handle COBRA at age 65, consider taking these steps:
- Find out the date your active employer coverage ends.
- Ask whether COBRA will pay after Medicare and how it coordinates with Parts A and B.
- Review your Medicare Initial Enrollment Period well before your 65th birthday.
- Confirm whether your COBRA prescription coverage is creditable for Part D.
- Compare the total coverage, provider access, and out-of-pocket costs of your available choices.
- Keep copies of any coverage notices and enrollment records.
Medicare and COBRA can be confusing because a missed deadline may lead to delayed coverage or added costs. If you would like free, no-pressure help reviewing your Medicare options, Eric can help you understand how Original Medicare, Part D, and Medicare Supplement plans may fit your situation.