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Medicare & Cobra Insurance

For many people, one health insurance policy is complicated enough. When you have two policies, things may start to get even more confusing. Understanding how Medicare and COBRA insurances work together can prevent service denials, premium penalties, gaps in coverage and a lot of headaches.

  1. What is Medicare?

    • Medicare is a federal insurance program designed to give the elderly and disabled access to comprehensive care in the United States. Any United States citizen who is qualified disabled or 65 and older can join.

    What is COBRA?

    • The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a law that allows people to purchase a health insurance policy if they are are losing health insurance for any qualifying reasons, such as a job loss.

    You Have COBRA Before Medicare

    • If a beneficiary becomes Medicare-eligible after he purchases a COBRA plan, the COBRA plan may terminate. If the beneficiary becomes Medicare-eligible and does not take Part B, he will incur a premium penalty if he does eventually take Part B because losing COBRA coverage does not entitle anyone to a special enrollment period.

    You Become COBRA-Eligible After Medicare

    • COBRA must allow the beneficiary to enroll if he had COBRA coverage before becoming Medicare-eligible. COBRA then works as a secondary insurance, paying for coinsurance and through deductibles.

    Drug Coverage

    • In order to avoid paying premium penalty when delaying Medicare Part D prescription drug coverage enrollment, the beneficiary should be enrolled in what is considered a creditable drug plan. If the COBRA plan has drug coverage, it is not considered creditable coverage under Medicare.

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