Medicare is confusing, and it becomes even more so when deciding whether to pair it with another health care coverage option. A common question we receive at RetireMEDiQ is, “Can I use COBRA as my health coverage plan if I am 65 and older and am no longer employed?”
The answer: it depends.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals who are no longer employed to maintain employer-provided health coverage for 18 – 36 months; however, enrolling in COBRA can be rather expensive as those who utilize COBRA as their health care plan may be required to pay up to the employer’s full cost plus an additional two percent. While the general guidelines surrounding COBRA eligibility seem straight forward, there are additional rules and exceptions for individuals who are 65 and older and find themselves without a job but are not yet retired.
If you are 65 and older and have recently become unemployed – either at your own choosing or due to economic reasons – and you are not retiring, you cannot utilize COBRA as your health coverage provider. Individuals who are Medicare-eligible but do not enroll and are not covered by an employer health plan linked to current employment will be charged late enrollment penalties at the time of Medicare enrollment. In addition, they will also be charged higher rates for their monthly Medicare Part B premium indefinitely.
The only exception to this rule is if you are enrolled in Medicare Part A and Part B and have coverage through your employer’s group plan at the time of unemployment. These cases are extremely rare but if you do find yourself fitting this category, you will be allowed to enroll in COBRA. Medicare would continue to serve as your primary health care coverage with COBRA as your secondary for services not covered under Parts A and B.
Another important circumstance to note is if you become eligible for Medicare after signing up for COBRA, your COBRA benefits will be discontinued. If your spouse and/or dependent children received coverage through your COBRA plan, they may be able to keep their coverage for up to 36 months because you are now qualified for Medicare.
Regardless of your employment status, your safest bet is to enroll in Medicare as soon as you are eligible to avoid costly fees and premiums and/or potentially losing coverage. If you have additional questions regarding Medicare or are ready to begin exploring your options, give our experts a call at 1-855-465-2773 or schedule an appointment online.