COBRA or Medicare?

When leaving a job after age 65, some people are offered COBRA and assume it works the same as employer health insurance when it comes to the timing of enrolling in Medicare.  COBRA is a federal law that allows you to continue your employer's health insurance for a limited time after leaving your job or losing coverage, typically at your full expense. While it may seem like you're simply keeping the same insurance, your Medicare rights and responsibilities change once your active employment ends.

Why This Matters

If you are 65 or older and covered by an employer health plan based on your current employment, you may be able to delay Medicare Part B without a penalty.  However, once your employment ends, that protection generally ends as well.  Many people mistakenly choose COBRA instead of enrolling in Medicare Part B, believing they can simply sign up for Medicare later when COBRA expires. In many cases, that is not true. 

Does COBRA Count as Creditable Coverage for Part B?

No.  COBRA is not considered coverage from current active employment. As a result, it does not protect you from Medicare Part B late enrollment penalties.  If you do not enroll in Part B when your Special Enrollment Period is available after leaving employment, you may:

• Face a lifetime Part B late enrollment penalty

• Experience a delay before Medicare coverage can begin

• Be left without adequate health coverage

What About Prescription Drug Coverage?

COBRA prescription drug coverage may be considered creditable coverage for Medicare Part D, depending on the plan. Your employer or COBRA administrator can tell you whether the drug coverage is considered creditable. The rules for Part D and Part B are different, which is one reason this topic can be confusing.

Which Is Better: Medicare or COBRA?

The answer depends on your individual situation.  Some people find Medicare provides broader coverage and lower overall costs than COBRA. Others may have temporary circumstances that make COBRA worth considering, like covering a spouse and/or children.  The important thing is understanding how Medicare enrollment rules apply before making a decision.

Before You Decide

Before choosing COBRA after age 65, make sure you understand how it affects your Medicare enrollment rights.  A decision that seems harmless today could result in penalties or delays later.  If you're leaving employer coverage and wondering whether Medicare or COBRA makes more sense, it's worth reviewing your options before making a final decision.

ABC Medicare Plans Broker

Diane Andree

631-337-3625

COBRA or Medicare