Many individuals who continue working after the age of 65 often elect COBRA coverage (if they are eligible) rather than enroll in Medicare Part B. However, in most cases, this is not the right choice. Read below for more details of delayed Part B enrollment.
The age of Medicare eligibility remains 65; below the full retirement age (under Social Security) for everybody born after 1937. The majority of people who continue to work after the age of 65 are covered by employee group health plans. They typically enroll in premium-free Medicare Part A (Hospital Insurance), but not in Medicare Part B (Medical Insurance covers doctors visits and other outpatient services) that is NOT premium free. When they retire or are laid off, they get an eight-month Special Enrollment Period (SEP) to sign up for Medicare Part B immediately and without penalty.
This, however, is NOT the case for COBRA. There is NO Special Enrollment Period to enroll in Part B after COBRA coverage ends, and this results in unforeseen and unfortunate consequences for the individual.
COBRA after 65 – Delayed Medicare Part B enrollment and late enrollment penalty
Consider a hypothetical case of Jim, age 69. He was born in April of 1942. He was enrolled in Medicare Part A (but not Part B) in October 2007. He continued to work and was covered under his employer’s group insurance plan. In February 2010 he became entitled to COBRA and choose to take it.
COBRA lasted 18 months; until July 31, 2011. Because the end of COBRA does not trigger SEP, the closest opportunity to get Part B will be by using the next General Enrollment Period (GEP). This period will run from January 1 through March 31, 2012 and coverage will begin July 1, 2012. As a result, Jim will be without Part B coverage for 11 months; from August 1, 2011 through June 30, 2012.
In addition, Jim will be charged a 10% late enrollment penalty which will be added to the standard monthly Part B premium for every 12 months of delayed Part B enrollment. The 10% penalty is for the lifetime of the insured.
In this scenario, the decision to elect CORBA was the wrong one. Instead, the SEP triggered by the loss of employee group coverage should have been elected; with no delay in getting Part B and no late enrollment penalty!
Is COBRA less expensive?
But maybe COBRA is less expensive, you might reason. Actually, research has shown that this is NOT the case at all.
COBRA is more expensive than paying for Medicare Part B and Medicare Supplement Plan F (the most comprehensive and expensive Medigap plan)
Get accurate information and you will conclude that it is best to stay away from COBRA if you are over 65!
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