Are You Eligible for Cobra If You Have Medicare?

After enrolling in Medicare, many people find that they need additional health care coverage to supplement the medical benefits they receive through the federal health insurer. If you are planning your retirement and like the benefits that you receive as a member of your company's group health plan, you can temporarily retain these benefits through COBRA, a federal law that requires companies to offer continuation health-care coverage to departing employees.

COBRA vs. Medicare

• COBRA, the acronym for the Consolidated Omnibus Budget Reconciliation Act, requires that employers offer to retain the health-care benefits retirees and other departing employees have as members of the company's group health plan. While COBRA requires a group plan to extend the coverage by 18 months, your plan may allow you to retain your coverage longer. Medicare, a federal health insurance program that you fund through your payroll taxes, provides hospital, medical insurance and prescription drug benefits for people ages 65 or older, some disabled people under the age of 65 and people of any age who have permanent kidney failure.

Complementary Coverage

• COBRA coverage generally provides the same benefits for inpatient and outpatient hospital care, physician care, surgery, prescription drugs, dental and vision care you have as an active employee. While some benefits may overlap with your Medicare benefits, COBRA coverage may allow you to retain access to medical professionals and services. COBRA coverage also may offer benefits that Medicare doesn't cover, such as coverage for trips to the dentist and the optometrist. Upon electing COBRA, some group health plans allow you to extend some benefits and decline others.

Cost

• As part of your compensation package, your employer paid a portion of the premium for your group health coverage. As a COBRA participant, you become responsible for the entire premium. Depending on the rates that your employer negotiates with its insurer, coverage through COBRA may cost less than purchasing additional coverage in the individual health insurance market. As a Medicare recipient, your premium for your medical coverage is based upon your income. If you've paid into the Medicare system through payroll deductions over the years, your coverage for hospital expenses comes at no charge.

Coordinating Benefits

• When you have more than one health insurer, it is important to understand how they coordinate payment of your medical claims. If you are 65 and enrolled in Medicare, the federal program is your primary payer and your group plan through COBRA is your secondary payer. Individual circumstances vary so it may be wise to seek guidance from your group plan administrator or a Medicare adviser. Speaking with an advisor about your individual circumstances may help you determine the out-of-pocket costs for co-payments and deductibles for which you may be responsible as well as any deadlines you must meet when enrolling in Medicare and electing COBRA.