Medicare and Cobra Cautionary Tale
Cobra may not be an option if your Medicare
Let’s say you’ve worked for a company and have been on their group plan. You’re making plans to retire and this will entail leaving the group plan. Being well-organized, you ask your HR department what options will be available to you since a colleague just left a few months back and had Cobra. What if you’re leaving your group plan and you’re over age 65 and/or eligible for Medicare? This is a very important question as some people find out the hard way. Your eligibility for Medicare can affect options available when leaving group coverage. Let’s look at an actual situation where we had to deal this situation directly. It was not a pretty situation and you don’t want to be there.
So we received the call from a woman who was in a panic. She had left group health insurance and the rep had told her she would have Cobra guaranteed issue. She asked multiple times and for good reason. She was scheduled for a surgery just 1 week out. It was a big surgery and she wanted to make there would be no issue. The HR rep was confident in her access to Cobra coverage since this option holds true for 99% of the employees leaving group health insurance at her company. There’s one caveat here. This woman was over the age of 65 and eligible for Medicare. This brought about an issue that usually doesn’t come up but will become more prevalent going forward.
If your eligible for Medicare or have Part A already enrolled, you may not be eligible for Cobra. Medicare supercedes Cobra if you’re eligible. Why couldn’t the woman above just sign up for Medicare at that point with a Medicare supplement. Part of it was a timing issue. By the time the smoke cleared and she realized that Cobra wouldn’t be available there were two issues. One was that we were past the 1st of the month in which the surgery was scheduled for. Even if we could get Part B setup with Medicare, the Medicare supplement side would be an issue past the 1st. The other problem is that you may need to wait for your Part B to start if you delay enrolling in Part B and this was the situation with the woman above. We had to scramble to set up a group plan for her other company but that was a last ditched effort that just barely came together as she was literally in pre-op. Don’t end up there and make sure to check with the carrier to see if Cobra is available.
We recommend contacting Social Security to check your Part A and most importantly, Part B enrollment status. They will be able to let you know if there will be any delay to set up Part B. You want to confirm the earliest available effective dates for both Part A and B. Medicare supplement eligibility is based on when Part A and Part B are eligible so as long as those are in order, the Medicare supplement insurance should be no problem. Ideally, you want your paperwork into the carrier 1 month prior to the requested effective date but with most solid carriers, you can submit the paperwork prior to the first of the month. Coming off of group health insurance (whether the actual group plan or Cobra) is a qualifying event even if you’re over age 65 to qualify for a Medicare supplement insurance plan regardless of health for a certain period of time. Make sure not to allow too much time to pass.
This situation will become more prevalent as the recent economic and stock market performance is forcing more people to work later. As licensed Medicare supplement insurance brokers, let us help you navigate this period with a smooth transition and without any frantic calls as mentioned above.