Taking COBRA Continuation After age 65

Post Date:March 12, 2018

Many who continue employer coverage after age 65 and do not sign up for Medicare Part B will suffer a rude awakening if they elect to take COBRA.  Currently, the law allows for a Special Enrollment Period for those that leave a group health insurance plan.  The problem arises when an employee elects COBRA after leaving employment.  COBRA is deemed by current law an individual health insurance plan, and there is no Special Enrollment Period allotted when someone changes from an individual plan to Medicare Part B.  This Catch 22 can result in late enrollment in Part B and a permanent late enrollment penalty.  Open enrollment for Part B takes place January 1st to March 31st each year with coverage starting July 1st.  This can result in a significant period with no outpatient coverage.  H.R.5104 is currently pending in the House to cure this Catch 22.

KIS has experienced instances where former employees where given severence packages by employers that included payment for COBRA continuation.  In those cases the client has had to pay penalties for their Part C Plan and experience a coverage gap for covered Part B services until they were able to enroll.

Remember, if you are going to continue working after age 65 and remain on your employers health insurance plan, and your employer employs more than 20 employees,  you may not need to enroll for Medicare Part C when you first become eligible since Medicare will be secondary payer and Part B will not be to your advantage.  If you continue working for an employer of fewer that 20 employees you can elect to remain on the employer's plan, but will have to enroll in Part B since Medicare will be primary and insurers will co-ordinate claims' payment assuming you have Part B.

In most cases it is less expensive for a person who works for an employer with less than 20 employees to waive the employer plan and enroll in a Medicare Advantage Plan with Rx coverage, or a Medicare Supplement, and a stand alone Medicare Part D Rx Plan.  This is especially true if your plan is a Qualified High Deductible Plan that works in conjunction with a Health Savings Account, especially if your health Savings Account is not funded or under funded to meet your needs for however many years you plan to continue working.  Although the Administration is currently working to change the law to allow people on Qualified High Deductible Plans to continue to contribute to an HSA if they remain on their employer plan after age 65, currently you can not contribute to a health Savings Account once you are on Medicare. 

If you have questions concerning thes issues please contact KIS.

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