Medicare and Cobra

Cobra is temporary insurance that allows people to remain on their group health plan after leaving employment for up to 18 months.  It is the same health insurance as before except you pay 102% of the premium (including what the employer was contributing).  This can be the best option coverage wise and even pricewise for some if under 65.

If you are 65 or older and you or your spouse is offered COBRA, YOU MUST GET Medicare to avoid any penalties. Medicare DOES NOT consider COBRA coverage as good or better than Medicare (“not creditable”).  What’s worse if you do NOT enroll in Medicare not only will you be penalized but COBRA will not pay your bills because they are secondary. 

When an insurance company is secondary that means that their contract and applicable laws dictate that they reduce their payment by the amount the first (primary) company would pay their share and that the second company pay only AFTER the first company. The Medicare Secondary Payer rules are complex. Much of the bill-shuffling takes place behind the scenes.

If you are 65 and over, you can apply for Medicare at ANY time (while covered by employer health insurance/group health insurance).  You also have up to 8 months are to sign up for Medicare when your group coverage ends. The problem with signing up after coverage ends is that YOU WILL have a lapse in health insurance UNLESS you take Cobra.

Most HR personnel and the average person do not realize that COBRA is not as good as Medicare and that YOU should sign up for Medicare before you (or your spouse) leave your employer. Here is the bottom line: RETIREMENT AFTER 65 = SIGN UP for Medicare (whether you are taking COBRA, Medicare Supplement, Medicare Advantage, Tricare, VA, or your employer’s retirement plan).

Heather Majka, CPCU, CSSCS

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