COBRA and Medicare

Typically, COBRA coverage is not something you’ll use when you're eligible for Medicare. However, there are a few exceptions to this rule, meaning COBRA coverage will make sense for some of you. For example, COBRA coverage may be a good idea for you if your previous employer is paying for it (i.e. as part of a severance package). 

Another instance COBRA may make sense for a Medicare eligible person is if they have  a younger spouse or children who are covered by their group plan. Now that they’re retiring, their younger spouse and/or won’t have any good insurance options, so they may decide to keep the COBRA for their spouse or children. 

Now we’re going to uncover how COBRA works when you’re Medicare eligible. We’ll do this by looking at a few different scenarios. 

Retired, Turning 65 & On COBRA

In this scenario, you and your spouse are both retired (so you have no group insurance plan available), and you’re approaching 65 but still have COBRA eligibility. In this case, you will need to start Medicare A and B during your initial enrollment period. 

Keep in mind there are only three different times you can come into Medicare. The first one is called the initial enrollment period (IEP), and it is a seven-month window beginning three months before you turn 65 and lasting three months after your 65th birthday month. The second opportunity to enroll in Medicare is the Special Enrollment Period (SEP). This eight-month period, beginning the month your employment ends (or your group health coverage ends), allows those who were still working at 65 to now come into Medicare without penalties. The third time you can come into Medicare is called the General Enrollment Period (GEP). The GEP is between January 1st and March 31st of every year. It is for those who made a mistake and failed to enroll in Medicare during the IEP and SEP. Unfortunately, if you miss the first two periods and enroll in the GEP, you will have lifetime penalties added to your coverage. 

Let’s go back to our example. You’re approaching 65 and you (and your spouse) are not working. This means you will enroll during the seven-month window called the IEP. If you wait to enroll until your birth month, your coverage will not start until the following month. If you wait to enroll until the month after your birthday, you will not get coverage until the month after that. So we advise you to enroll in Medicare during the first three months of the IEP. 

Now let’s suppose you’re turning 65 in July, you’re retired, and you have COBRA coverage. You may be tempted to hold off enrolling in Medicare so you can stay on your COBRA benefits, but don’t make this mistake. The absolute latest you can enroll in Medicare is October 1st. If you wait any longer, you will have to pay penalties.

There is a second timeline you need to be aware of in addition to Medicare’s Initial Enrollment Period. Many people decide to purchase a Supplemental plan when they enroll in Medicare A and B. Supplemental plans help cover the gaps left in Medicare A and B coverage. If you want to enroll in a Supplemental plan, you’ll need to do so during the first six months after your Medicare Part B effective date. This six month period allows you to purchase any Supplemental plan you want without having to go through medical underwriting. If you don’t enroll in a Supplemental plan during this period, you’ll have to medically qualify to purchase one in the future, and depending on your health issues, you may be denied coverage. 

What does this have to do with COBRA and Medicare? If you enroll in Medicare but still have COBRA coverage, COBRA will pay second to Medicare similar to how a Supplemental plan works. So since you have six months after your Part B effective date to enroll in a Supplemental plan, you may want to wait until the final month to enroll in a Supplemental plan. Why? If you have COBRA benefits and have not purchased a Supplemental plan yet, COBRA will pay second to Medicare. Once again, if you wait to enroll in a Supplemental plan longer than the six months after your Part B effective date, you may never be eligible to enroll in a Supplemental plan in the future, so make sure to enroll during that window of time. 

Worked Past 65, Retiring & on COBRA

The second group of people that may want to use their COBRA benefits for a period of time are those who have worked past 65. They may be 67 or 70 and now they’re going to retire.  If this is your situation, the first step is to start Medicare as soon as possible. Let's say your last day of work is June 30th, meaning you’ll lose your employer coverage on June 30th and become COBRA eligible on July 1st.

If you want to use your COBRA benefits, you will need to start Medicare on July 1st. Why? COBRA is not a primary payor. If you are Medicare eligible, COBRA only wants to pay second to Medicare. So when you get a medical bill, Medicare will typically pay about 80 percent of the bill, then send the remaining 20 percent to COBRA to cover.  

Let's say you don't enroll in Medicare and you have COBRA eligibility. If you have some kind of a large claim, you (instead of Medicare) will be in the first payor position. Meaning you will have to pay out-of-pocket for what Medicare would have paid (about 80 percent of the bill).

And just like in the previous scenario, if you worked past 65 and are now retiring and enrolling in Medicare, you have a six-month window after your Part B effective date to purchase a Supplemental plan. If you want to take advantage of your COBRA benefits during this six-month window, you can. Just make sure to start the Supplemental plan before the six-month period is up. If you miss this window of time, you will have to medically qualify to enroll in a Supplemental plan in the future. 

If you enroll in a Supplemental plan and have COBRA eligibility, Medicare pays first, your Supplemental plan will pay second, and COBRA will pick up the rest of the balance (although it probably won’t be much). 


Typically if you’re Medicare eligible, you won’t use COBRA coverage. However, if you have a younger spouse or children on your employer group plan, you may want to use COBRA once you enroll in Medicare. If you’re Medicare eligible, COBRA will be the second or third payor (depending on if you have a Supplemental plan), with Medicare and any additional insurance paying first. There are several strict timelines you have to abide by when you enroll in Medicare, so if you’re planning on using COBRA benefits, make sure to enroll in Medicare and any additional coverage within these time frames. 

We understand how difficult making the right Medicare decisions can be. To take the next step, watch our full course here, or schedule a free one-on-one call with a certified Medicare School Guide who can answer your questions, compare plans options, and even help you enroll. Click here to get started.


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