Janell Sluga Medicare & Individual Health Insurance Account Executive View Bio

Lawley Medicare Solutions Learning Center:

Ask Janell!

 

QUESTION: I am currently working, but will be retiring. I will need COBRA insurance until I turn 65. My wife has Medicare Part A with Social Security Disability. How does COBRA impact my wife’s insurance coverage?

 

ANSWER: The Consolidated Omnibus Budget Reconciliation Act (COBRA) is insurance that allows individuals to keep the insurance product they had while working. COBRA is available to purchase for 18 months and sometimes up to 36 months. The insurance policy is the same policy as you had while working, but you pay the total insurance premium without help from your previous employer. Often individuals appreciate the COBRA policy because it is the insurance product they are used to.

Original Medicare Part A & B is insurance that is available to those 65 or older and those younger than 65 on Social Security Disability.

Those who are eligible for Medicare sometimes want to hold off enrolling due to other insurance product options they have available to them. This is ONLY advisable if you have insurance provided by a current employer. COBRA by definition means you are no longer working. COBRA and Medicare are rarely useful at the same time.

You may be on COBRA after your employment ends, but once you are eligible for Medicare, you should enroll in Medicare A & B. For you, enrollment in Medicare would mean that you drop the COBRA. There are many high-quality insurance products for you to use with your Medicare that will cost less than your COBRA.

Your wife has a different situation. She has Medicare Part A right now and your current employer’s coverage. She will need to enroll in Medicare Part B and find additional coverage once your employment ends. In her situation, COBRA is not the best option. Once enrolled in Medicare Part B, she will have many other options available to her. Her coverage would be Medicare Part A & B plus other products that include Prescription Drug coverage. Her coverage would be individual coverage only. So you and your wife would have different insurance coverage.

I occasionally run into someone who delays getting into Medicare because they have COBRA. This is a serious mistake. If you miss your Initial Enrollment Period (IEP) when you turn 65, or the Special Enrollment Period (SEP) because you left work, you can’t enroll into Medicare A & B anytime you want. And when you do join there is a premium penalty of 10% for each 12 months you were eligible to enroll and did not. This premium penalty is a penalty you pay each month for the rest of your life. Another concern is that when COBRA catches up with the fact that you should have enrolled in Medicare, they may NOT pay your full claims because they should have been secondary to Medicare. In this situation, COBRA will not pay more than 20% of any claim because Medicare would have paid the first 80% if you had been enrolled.

A related question is: what about Medicare Part D, the prescription drug coverage portion of Medicare? If you have Medicare A or B, you must have Prescription Drug Coverage. The coverage could be a Medicare Part D provider, an employee plan, a retiree plan, COBRA, or the Veterans Administration.

If you have COBRA and are close to the opportunity to enroll in Medicare please do NOT put off enrolling in Medicare. Research your options for Medicare coverage. You could enroll in Medicare Part A & B and KEEP your COBRA coverage. This is probably NOT the most cost-effective coverage for most individuals.

Health Care Reform and the Affordable Care Act means that all individuals are eligible to get Health Insurance no matter what their age or situation. Please be sure to review all options (like the New York State of Health Marketplace) for insurance before you decide to keep your COBRA policy. You don’t necessarily need to be paying those really high COBRA premiums if there are other options available to you. To talk with someone about the Affordable Care Act plans, I recommend seeking a Certified Navigator.

 

Read all Inside Medicare articles HERE.

 

LAWLEY HAS A TEAM DEDICATED TO MEDICARE INSURANCE!

Our licensed Medicare & Individual Health Insurance team can help clients understand the details of Medicare insurance plans, assist with choosing the right benefits and coverage, and provide guidance when life events that affect health coverage occur.

For questions, concerns, or to reach Lawley Medicare Solutions, fill out the contact form below or call 716.849.1540.