What happens if I have Medicare (Part A and/or Part B) and then become eligible for COBRA?
If you already have Medicare (e.g., because you are over the age of 65), but you lose or leave your job, you may be eligible for COBRA. You can choose to enroll in COBRA, in addition to your Medicare coverage, but you are not required to. This is a personal decision. COBRA can be expensive. But, if you have both types of insurance, you may be able to lower your out-of-pocket costs. And, your COBRA coverage may cover some things that Medicare does not (e.g., certain providers, dental care, vision care, etc.). If you choose to enroll in COBRA, Medicare will be primary and COBRA will be secondary. This means that when you get medical care, Medicare will pay first, and then COBRA will pay for some or all of the costs that Medicare didn’t pay for.
Carol, age 66, has Medicare Parts A and B. She works full-time and has employer-sponsored health insurance. Because Carol works for an employer with more than 20 employees, her employer plan is primary and Medicare is secondary. Carol’s supervisor tells her that her job will be eliminated next month. Can Carol elect COBRA even though she has Medicare? Yes. Because Carol had Medicare before becoming eligible for COBRA, she can elect COBRA. In that case, Medicare will be her primary insurance and COBRA will be secondary.
- What if I only have Part A? If you only have Part A, and want to choose COBRA, you should consider enrolling in Part B during your Special Enrollment Period. If you do not enroll in both A and B, COBRA may refuse to pay your claims. Also, not signing up for Part B during special enrollment may force you to pay late enrollment penalties later. For more information about enrolling in Medicare, including late enrollment penalties and potential gaps in coverage, read the Quick Guide to Medicare Enrollment.
- What about my prescription drug coverage? If your COBRA prescription drug coverage is “creditable” (i.e., at least as good as Medicare), you can wait to enroll in a Medicare Part D drug plan without a late enrollment penalty. When your COBRA coverage ends, you will get a Special Enrollment Period of 2 months after the month COBRA ends to enroll in a Part D plan or Medicare Advantage Plan with prescription drug coverage. Ask your benefits representative at work, or your COBRA health insurance company, if your coverage is creditable.
- Will switching my prescription drug coverage impact any financial assistance I receive? Some individuals receive financial assistance for one or more of their medications from pharmaceutical companies. COBRA coverage is identical to the coverage you had through your employer group health plan, so if you were eligible for financial assistance while employed, you should also have it while covered by COBRA. However, this assistance may no longer be available if you switch to a Part D plan or a Medicare Advantage Plan that has prescription drug coverage. Contact the pharmaceutical assistance program(s) to learn about your options.
- Can I buy a Medigap Plan? If you choose COBRA, you have a guaranteed issue right to buy a Medigap plan at the same time, or you can wait until your COBRA coverage ends.