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COBRA and Medicare: How It Works Together

A reliable health insurance plan can give you the peace of mind you need, and there are many federal insurance options available. 

COBRA and Medicare are two types of health insurance plans administered by the federal government. COBRA provides continuation coverage for beneficiaries after their employment ends. Medicare provides health insurance coverage for people over the age of 65, as well as some younger people with qualifying disabilities.

If you’ve just become Medicare eligible, you might be wondering: can I have Medicare and COBRA at the same time? 

Although having both Medicare and COBRA coverage is possible, it may not be an option for everyone. Let’s talk about how COBRA and Medicare eligibility work together.

What is Medicare?

Medicare is a health insurance program run by the federal government primarily for people 65 years of age and older. Medicare is also available to people under the age of 65 who have end-stage renal disease or other qualifying disabilities.

Medicare is broken up into four parts. Part A and Part B provide hospital coverage and medical coverage. These parts are administered by the federal government.

Medicare Part D provides prescription drug coverage. These plans are administered by private insurers. Medicare Part C, also known as Medicare Advantage, is a privately run alternative to traditional Medicare that combines Parts A, B, and D in one plan.

The Medicare program helps older adults and adults with disabilities get medical coverage, regardless of income. However, some adults who have Medicare are also eligible for other forms of insurance, such as COBRA. 

What is COBRA?

COBRA is a law that provides continuing insurance to employees after they are no longer eligible for group health plan coverage. 

This often happens when an employee leaves or is let go from their job. It can also happen when an employee shifts to a part-time schedule, or when life events like death or divorce affect employment.

COBRA is typically available for every private employer with over 20 employees, as well as state and local government employers.

In most cases, eligible beneficiaries can get COBRA for up to 18 months after they lose coverage to help them handle and avoid unexpected medical bills. However, some instances qualify for an extension of up to 36 months in total.

COBRA Eligibility and Medicare

The COBRA and Medicare rules can be a little tricky, especially if you’re qualifying for both programs for the first time. Your eligibility will depend primarily on which form of insurance you had first. Here are some key factors to consider when it comes to your COBRA eligibility and Medicare. 

COBRA Eligibility Timing

If you had Medicare insurance coverage first and then qualified for COBRA, you can have both forms of coverage at the same time. Medicare will be your primary payer and COBRA will be your secondary payer. This means that your health expenses will be billed to Medicare first, and COBRA may cover some expenses that Medicare doesn’t.

If you have COBRA before you become Medicare eligible, your COBRA benefits will stop when you turn 65. You may be able to continue using COBRA as secondary coverage for things like prescription drug expenses as long as your COBRA plan is considered creditable coverage.

Avoiding Late Enrollment Penalties

If you’re both COBRA and Medicare eligible, you’ll need to understand when coverage ends and starts for both programs. This can help you avoid late enrollment penalties for Medicare.

For example, some employees over the age of 65 only have Medicare Part A and use their employer-provided health coverage instead of Part B. If you leave your job, you’ll have eight months to enroll in Medicare Part B before receiving a late enrollment penalty.

This also applies to Part D drug coverage. Some COBRA plans are considered creditable alternatives to Part D coverage, but not all are. If your COBRA plan is creditable, you can avoid late enrollment penalties for Part D as long as you’re on it. 

However, if your COBRA plan is not creditable, you’ll have approximately two months to enroll in Medicare Part D before late enrollment penalties kick in.

COBRA Continuation for Dependents

Many people use COBRA insurance not just for themselves, but also for their dependents. In most cases, your dependents can continue to use your COBRA coverage even after you become eligible for Medicare.

Say you’re on COBRA, you’re set to turn 65, and you have two children who depend on you for health insurance coverage. In this case, COBRA would cease to be your primary form of healthcare coverage. 

However, according to COBRA and Medicare rules, your dependents can continue to use your COBRA insurance as their primary healthcare coverage.

At Senior Insurance Agency, we help clients navigate the ins and outs of Medicare coverage. 

When you work with our team, you’ll get ongoing support and reliable communication, without the high-pressure sales tactics. Our insurance agents in Sparks, NV will help you access Medicare plans and find options that work with COBRA coverage. 

We provide transparent, personalized services, using the Medicare Scope of Appointment form to ensure that appointments are tailored to your needs. 

Contact us today to talk to an agent and get started. 

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