What You Need to Know About COBRA and Medicare
COBRA and Medicare do not always work well together. Are you unknowingly putting your Medicare coverage at risk?
Let us explain. First:
What is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) is Federal legislation that allows some former employees and family members to stay on the company-sponsored medical benefits plan for limited periods of time under certain circumstances.
COBRA generally requires that group health plans, sponsored by employers with 20 or more employees in the prior year, offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.
How Do I Qualify For COBRA?
Qualifying events most often include voluntary or involuntary job loss, reduction in the hours worked, death, or divorce. This continuation of coverage can last up to 18 months, or more under certain circumstances. Qualified individuals may be required to pay the entire cost of the coverage plus a 2% administration fee.
The COBRA/Medicare Trap
OK, here’s the rub.
Medicare requires seniors to have other “creditable coverage”, if they choose not to enroll in Original Medicare A & B or just Part A, to avoid any late enrollment penalties or coverage gaps.
Employer-sponsored medical plans always count as “creditable coverage.” COBRA continuation coverage does not count as “creditable coverage.”
COBRA is NOT creditable coverage through Medicare
Why is this Important?
A Special Enrollment Period (SEP) only occurs when a person loses “creditable coverage”. Losing COBRA continuation coverage DOES NOT create an SEP to enroll in Medicare.
If you can’t enroll in Medicare, you can’t enroll in a Medicare Advantage plan or a Medicare Supplement plan.
And you may end up with a huge gap in coverage. That’s the COBRA trap!
Be especially careful not to get bit by the COBRA. Call your local Minneapolis long term care insurance experts at (952) 937-9127 if you have any questions or are looking for an antidote.