Dear Marci,
I will be leaving my job soon and my employer has informed me about my right to COBRA coverage. I’ll also be eligible for Medicare soon. How do Medicare and COBRA work together? I want to make sure I make the right enrollment decisions.
-Clayton (Twin Falls, ID)
Dear Clayton,
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that lets certain employees, their spouses, and their dependents keep group health plan (GHP) coverage for 18 to 36 months after they leave their job or lose coverage for certain other reasons, as long as they pay the full cost of the premium.
Under COBRA, a GHP is defined as a job-based insurance plan that provides medical benefits to employees, their spouses, and/or their dependents.
As you make COBRA-related decisions, keep in mind that health coverage under COBRA is typically expensive because it tends to be comprehensive, and you may pay the full cost of the premium yourself (employers often pay part of the premium for current employees). However, COBRA coverage may be less expensive than similar individual health coverage.
The way that COBRA and Medicare coordinate depends, in part, on which form of insurance you have first. While it is possible to get COBRA if you already have Medicare, it is not usually possible to keep COBRA if you have it before you become Medicare-eligible. Specifically, whether you can have both COBRA and Medicare depends on which form of insurance you have first. If you have both forms of coverage, COBRA pays secondary to Medicare.
- If you have COBRA when you become Medicare-eligible, your COBRA coverage usually ends on the date you get Medicare. You should enroll in Part B immediately because you are not entitled to a Special Enrollment Period (SEP) when COBRA ends. Your spouse and dependents may keep COBRA for up to 36 months, regardless of whether you enroll in Medicare during that time.
- You may be able to keep COBRA coverage for services that Medicare does not cover. For example, if you have COBRA dental insurance, the insurance company that provides your COBRA coverage may allow you to drop your medical coverage but keep paying a premium for the dental coverage for as long as you are entitled to COBRA. Contact your plan for more information.
- If you have Medicare Part A or Part B when you become eligible for COBRA, you must be allowed to enroll in COBRA. Medicare is your primary insurance, and COBRA is secondary. You should keep Medicare because it is responsible for paying the majority of your health care costs. COBRA is typically expensive, but it may be helpful if you have high medical expenses and your plan covers your Medicare cost-sharing or offers other needed benefits, or if the COBRA policy also covers other family members who are not Medicare eligible.
Note: If you are eligible for Medicare due to End-Stage Renal Disease (ESRD), your COBRA coverage is primary during the 30-month coordination period.
-Marci
