Is COBRA Creditable Coverage for Medicare

If you’re on COBRA through you or your spouse’s current or previous employer and are eligible for Medicare, you probably have questions about the future of your coverage. We’re here to explain how these coverages work together and answer the most frequently asked questions about this topic.

Medicare and COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) helps employees extend health care benefits at least 18 months after they cease to be eligible. Qualifying events for COBRA include termination of employment or reduction in working hours.

It is possible to have COBRA and Medicare coverage at the same time. However, it can become confusing if you do not have accurate information.

Medicare and COBRA do not coordinate the same as employer coverage and Medicare. When you have COBRA, Medicare usually pays first, and COBRA pays second.

However, your group insurance may have special rules determining the primary payer. Refer to your COBRA plan document for details regarding your plan.

If a COBRA beneficiary becomes entitled to Medicare during their COBRA continuation period, coverage is terminated unless otherwise stated by their policy details.

If your coverage ends and your spouse or children are covered under the plan, their coverage will generally continue until the 18th month. It is important to know the terms of your COBRA policy to know if your plan will continue once eligible for Medicare.

If you decide to enroll in Part B while you are working and keep your group coverage, you can have Medicare and COBRA at the same time when you retire.

If you’re Medicare-eligible and have COBRA, you should enroll in Medicare Part B. Delaying your Part B while on COBRA could result in penalties.

Because COBRA only extends group benefits for up to 18 months, it’s rare for it to be a Medicare-eligible person’s best option for health care coverage. Often, Medicare will offer more benefits at a lower cost.

Do I Need Medicare Part B if I Have COBRA?

If you’re working past 65 and retire later, you MUST enroll in Part B within the first eight months you have COBRA even if your COBRA stays active longer than eight months. This is because COBRA is not credible coverage for Part B.

Those who miss this timeframe will incur a Part B late penalty. If you’re on COBRA and under 65, you must enroll in Part A and Part B during your Initial Enrollment Period.

Your Initial Enrollment Period will begin three months before your 65th birthday. Yet, you will incur penalties if you don’t enroll during the seven-month window.

We recommend looking into alternative health care options before choosing COBRA. Often, Marketplace plans are more cost-efficient than COBRA if a beneficiary is under 65.

FAQs

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