COBRA and Medicare

by | Aug 4, 2022

Is COBRA considered credible coverage for Medicare Part B?

If you have turned 65 and your employer coverage is ending, it is difficult to know whether to apply for Medicare or use COBRA. In most cases, the best choice is to apply for your Medicare Part A and B. Usually, this choice will be the most cost-effective and you will avoid the late enrollment penalties that could apply if you delay your Part B. COBRA is not considered credible coverage for Part B.

Is COBRA considered credible coverage for Medicare Part D?

When it comes to Part D, the rules around COBRA are a little fuzzier. If the COBRA prescription drug coverage is as good or better than Medicare coverage, you can avoid a late enrollment penalty when you do enroll in Part D. However, if the coverage does not qualify as credible coverage, you can incur a late enrollment penalty for every month that you do not have coverage starting at 63 days after your credible coverage ended. This is a lifetime penalty that must be paid every month when you do obtain Part D coverage. It is important to contact the benefits or HR department at your employer to determine if your employer or COBRA coverage counts as credible drug coverage.

Why Isn’t COBRA credible coverage?

For coverage to be considered credible, it must be as good or better than Medicare coverage. Per the government definition, COBRA does not meet these qualifications for Part B.

Is COBRA ending a qualifying event for Medicare?

Since COBRA does not count as credible coverage for Medicare, COBRA coverage ending is not a qualifying event to sign up for Medicare Part B. If you work past age 65 and your employer coverage ends, you will have 8 months to sign up for Part B. If you miss that window, late enrollment penalties will start building and you must wait until the General Enrollment Period (January 1 – March 31 each year) to sign up for Part B. If you sign up during the General Enrollment Period, your Part B will begin July 1 of that year.

What happens if I turn 65 while on COBRA?

If you turn 65 and you are already on COBRA, your COBRA coverage will cease. You will need to enroll in Medicare Part A and Part B.

If your Medicare benefits begin on or before the day that you start COBRA coverage, Medicare will become your primary insurance coverage, and COBRA, if you choose to keep it, will become your secondary coverage.

It is important to look at all the available plan options when you turn 65, as it is likely that moving to a Medicare plan will be more cost-effective than remaining on COBRA. Be sure to seek out a Medicare broker that can assist you in assessing your options.

Is COBRA more expensive than Medicare?

In most cases, COBRA will be significantly more expensive than Medicare, even if you add supplemental coverage. In rare circumstances, this might not be the case. Be sure to examine your coverage options when you turn 65 to determine your costs for each type of plan.

Does Medicare cancel COBRA?

If you were on COBRA before you signed up for Medicare (like when you turn 65), your COBRA coverage will most likely end. Once your Medicare coverage is in place, it is recommended that you contact the carrier of your COBRA insurance to ensure your coverage is canceled to prevent any additional charges.

If you still have questions about COBRA and Medicare, we are here to help! Feel free to reach out to us anytime. Consultations are always at no cost to you.