Does COBRA Coverage End at Medicare Eligibility or When You Opt for Medicare?

Under federal law, most workers with employer-provided health insurance have the right to continue coverage for a certain amount of time after they leave their jobs. However, the law that provides this guarantee -- known as COBRA -- allows health plans to cancel this "continuation coverage" under certain circumstances. One of those is when you are eligible to receive Medicare benefits.

COBRA

• COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, a mammoth piece of legislation with thousands of provisions, one of which guarantees that workers can keep their health insurance. COBRA applies to group health plans offered by employers with at least 20 employees. When you leave your job, whether it's due to a lay off, you quit or you are fired, you have the option of continuing your coverage for up to 18 months, or 36 months in special circumstances. COBRA coverage isn't cheap. You have to pay the full cost of the premiums yourself -- including the portion that your employer formerly paid, which is usually well over half the cost.

Reaching Medicare Age

• Under Section 1162 of Title 29 of the U.S. Code, the guarantee of COBRA continuation coverage ends when you become "entitled to benefits under Title XVIII of the Social Security Act," which is Medicare. Note that it doesn't say COBRA ends when you actually opt to enroll in Medicare, only when you are eligible to receive Medicare. This entitlement begins at age 65. If you're receiving COBRA coverage, your health plan can cut you off when you turn 65 regardless of whether you signed up for Medicare. Of course, plans may not actually end at 65, but the law says they can do so.

Planning Ahead

• COBRA recipients aren't the only ones who can face an automatic loss of health coverage at age 65. Even workers who are still on the job and covered by their employers' health plans often find that those plans drop them at age 65 because they're entitled to Medicare benefits. This is one of the reasons why the Social Security Administration wants you to ensure that your Medicare benefits will be active on the day you turn 65, so you don't have to risk going uncovered for even a day.

Enrolling in Medicare

• If you're already receiving Social Security benefits when you turn 65 -- you can begin taking benefits as early as age 62 -- then you'll be automatically enrolled in Medicare, so your coverage should be active. But if you don't receive Social Security, you'll have to contact Social Security yourself. The Social Security Administration recommends doing so at least three months before your 65th birthday.