why can't cobra be a medicare substitute

Because COBRA does not count as insurance from active employment, you will not be protected from delayed coverage and late penalties if you wait to enroll in Medicare later than you should.

Full Answer

Does Cobra take the place of Medicare?

What it does not do, however, is take the place of employer group coverage in the eyes of Medicare. An employer plan may excuse someone from needing to sign up for Medicare when they turn 65. However, COBRA does not qualify as group health coverage from an active employer.

Do spouses and dependents qualify for Cobra if they have Medicare?

Some people may decide to keep their COBRA coverage along with Medicare in order to retain additional benefits offered through the employer’s health plan. Do spouses and dependents qualify for COBRA if they lose coverage when an employee ages into Medicare? Yes. Employee enrollment in Medicare is considered a qualifying event under COBRA.

Is there an alternative to COBRA insurance?

High Deductible Health Insurance A high deductible health insurance plan can make an excellent alternative to COBRA insurance. These plans have a lower monthly premium, but you have a high deductible to meet before coverage kicks in.

Can I keep my health plan through Cobra if I Quit?

If you want to keep your health plan through COBRA, you must leave your job through a "qualifying event." This can include leaving your job for any reason other than gross misconduct or a reduction in the number of hours you work.

Can I keep COBRA instead of Medicare?

While it is possible to get COBRA if you already have Medicare, it is not usually possible to keep COBRA if you have it before you become Medicare-eligible. Specifically, whether you can have both COBRA and Medicare depends on which form of insurance you have first.

Does COBRA count for Medicare?

Does COBRA Count as Creditable Coverage for Medicare? To avoid penalties with Medicare, you must have creditable coverage. This means coverage that's at least equivalent to Medicare. COBRA does NOT meet these standards.

Why is COBRA not creditable coverage?

COBRA is not normally considered to be creditable coverage for Medicare major medical benefits, so people who are enrolled in COBRA and do not enroll in Medicare Part B within 8 months of turning 65 face substantial financial penalties for the rest of their lives, even if they have months or years left on their COBRA ...

Can I have both Medicare and COBRA?

If you have Medicare first and then become eligible for COBRA, you can have both Medicare and COBRA. It is important to remember that Medicare pays first and COBRA pays second.

Can I stay on COBRA after age 65?

If you get COBRA Before Medicare If you get COBRA first and then become eligible for Medicare, when you turn 65, COBRA will cease providing primary insurance coverage to you. Medicare will become primary, and if you can keep COBRA, it will become your secondary insurer.

Does COBRA end when Medicare begins?

If you have COBRA before signing up for Medicare, your COBRA will probably end once you sign up. You have 8 months to sign up for Part B without a penalty, whether or not you choose COBRA. If you miss this period, you'll have to wait until January 1 - March 31 to sign up, and your coverage will start July 1.

How long can my spouse stay on COBRA If I go on Medicare?

36 monthsIf the qualifying event is the death of the covered employee, divorce or legal separation of the covered employee from the covered employee's spouse, or the covered employee becoming entitled to Medicare, COBRA for the spouse or dependent child lasts for 36 months. Q8: How is COBRA affected if I am disabled?

Is COBRA considered continuous coverage?

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

Is COBRA considered group coverage?

COBRA coverage is not considered a group health plan based upon current employment. So, if an employee becomes eligible for Medicare but elects not to enroll at that time, believing he or she will enroll in COBRA instead, there are no future “special enrollment rights” for Medicare.

How long can I stay on COBRA when I retire?

18 monthsUnder COBRA, a retired employee can receive the same health insurance coverage for up to 18 months. But you must pay the entire premium - part of which your employer probably previously covered. In some cases, people who opt to use COBRA also have to pay an extra 2% to cover administrative fees associated with it.

Can I use COBRA if I retire?

Retirees may use COBRA Insurance For 18 Months Retirement is a qualifying event. When a qualified beneficiary retires from their job, the retired worker is entitled for up to 18 months health insurance continuation, which is the maximum amount of time an employee can keep COBRA continuation.

Can you have Medicare and employer insurance at the same time?

Can I have Medicare and employer coverage at the same time? Yes, you can have both Medicare and employer-provided health insurance. In most cases, you will become eligible for Medicare coverage when you turn 65, even if you are still working and enrolled in your employer's health plan.

Do you pay Medicare Part A premiums?

Medicare is divided into parts. Medicare Part A is hospital coverage, and most people do not pay a premium for it. As long as you’re eligible for Social Security or Railroad Retirement Board benefits, you won’t pay Part A premiums.

Does Medicare Advantage cover Cobra?

The cost of Medicare Advantage plans varies depending on the plan you choose and your location. Not all plans are available in all states. You can generally find Medicare Advantage plans that cover services original Medicare doesn’t. Your costs compared to a COBRA plan will depend on the details of the COBRA plans and Advantage plans available to you.

Does Cobra save money?

A COBRA plan is likely to cover services that original Medicare doesn’t. Depending on your need for those services, COBRA might save you money. But purchasing a supplemental Medigap plan can also help cover some of those costs and may be less expensive than COBRA. It’s important to read your plan details carefully and compare it with Medicare coverage.

Does Cobra include Medicare?

Your COBRA plan will likely include coverage for medications but you’ll be responsible for paying the entire premium amount. Medicare Part D plans are available at a wide variety of premiums. You can choose a plan that fits your needs and budget.

How many employees can you have with Cobra?

In general, COBRA only applies to employers with 20 or more employees. However, some states require insurers covering employers with fewer than 20 employees to let you keep your coverage for a limited time.

How long does Cobra last?

COBRA coverage generally is offered for 18 months (36 months in some cases). Ask the employer's benefits administrator or group health plan about your COBRA rights if you find out your coverage has ended and you don't get a notice, or if you get divorced.

What is the number to call for Medicare?

If your group health plan coverage was from a state or local government employer, call the Centers for Medicare & Medicaid Services (CMS) at 1-877-267-2323 extension 61565. If your coverage was with the federal government, visit the Office of Personnel Management.

Do you have to tell Cobra if you are divorced?

You or the covered employee needs to tell the plan administrator if you qualify for COBRA because you got divorced or legally separated (court-issued separation decree) from the covered employee, or you were a dependent child or dependent adult child who's no longer a dependent.

Do you have to tell your employer if you qualify for Cobra?

Once the plan administrator is notified, the plan must let you know you have the right to choose COBRA coverage.

How long does Cobra coverage last?

(But if COBRA covers your spouse and/or dependent children, their coverage may be extended for up to 36 months because you qualified for Medicare.) Return to Medicare Q&A Tool main page >>.

When does Cobra expire?

Therefore — regardless of how many months of COBRA coverage you’re offered — if you’re retiring before or at age 65, you should sign up for Medicare during your seven-month initial enrollment period (IEP), which expires three months after the month in which you turn 65.

What happens to a qualified beneficiary after electing Cobra?

The qualified beneficiary becomes covered by another group health plan after electing COBRA. The qualified beneficiary becomes entitled to Medicare after electing COBRA . A qualified beneficiary who had been disabled is determined not to be disabled.

How long can you extend Cobra?

The Medicare entitlement of the individual can extend COBRA for the individual’s spouse and dependents for up to an additional 18 months (36 months in total) if the COBRA-qualifying event (termination of employment or a reduction of hours of the employee) occurs within 18 months after the individual became entitled to Medicare. Note, this would not apply to the normal 36-month periods that the spouse or dependent would have based on the death of the employee, divorce or the dependent losing eligibility.

What is Medicare eligibility?

The COBRA regulations repeat the definition of the Medicare regulations. The Medicare regulations state eligibility for Medicare is the time when an individual meets all the requirements for entitlement to Medicare except application or enrollment in Medicare. Entitlement to Medicare, therefore, means all the requirements for Medicare have been ...

How long does it take for a cobra to be extended?

If the employee enrolled in Medicare 17 months before the COBRA-qualifying event, there could be up to an additional 19 months of COBRA. Again, Medicare eligibility is not enough to extend COBRA under the rules, so employers need to be aware of the actual enrollment in Medicare and not use an employee’s age as a proxy.

How long does it take for a covered employee to get Medicare?

A divorce or legal separation from the covered employee – 36 months. Ceasing to be a dependent child under the terms of the plan – 36 months. The covered employee becomes entitled to Medicare – 36 months.

When does a qualified beneficiary become eligible for Medicare?

The regulation states, “ [A] qualified beneficiary becomes entitled to Medicare benefits upon the effective date of enrollment in either part A or B, whichever occurs earlier. Thus, merely being eligible to enroll in Medicare does not constitute being entitled to Medicare benefits.”.

Can you enroll in Medicare if you are not employed?

In addition, there are insurance policies that assume the people who are not actively employed are enrolled in Medicare for purposes of coordination of benefits policies, which would be relatively rare for COBRA participants, as those policies would more often end upon enrollment in Medicare.

When does Cobra end?

If you have COBRA during this time, COBRA will be your primary insurance during your 30-month coordination period. If your COBRA coverage ends before the 30 months have passed, Medicare becomes primary. If you still have COBRA when the 30-month coordination period ends, Medicare will pay first and your COBRA coverage may end.

How long does Cobra last?

COBRA can provide continuation of health insurance for 18 months up to 36 months and can be a literal lifesaver for people who lose their jobs and health coverage or, as in this situation, lose access to group coverage because of a divorce. What it does not do, however, is take the place of employer group coverage in the eyes of Medicare.

How long does it take for Medicare to pay for ESRD?

If you are eligible for Medicare because you have ESRD, there is a period of time when your employer group health plan will pay first and Medicare will pay second. This is called the 30-month coordination period. If you have COBRA during this time, COBRA will be your primary insurance during your 30-month coordination period.

When does Medicare start for disabled people?

For a disabled person younger than 65, Medicare is usually effective in the 25th month after they start receiving Social Security Disability payments. A disabled person eligible for Medicare thus faces the same eight-month window to sign up for Medicare after they lose employer group health insurance.

Does Cobra qualify for Medicare?

An employer plan may excuse someone from needing to sign up for Medicare when they turn 65. However, COBRA does not qualify as group health coverage from an active employer. Even if a person’s COBRA coverage is identical to their former group plan, ...

Is Cobra insurance creditable?

If a COBRA policy includes prescription drug coverage, make sure it is “creditable” in the eyes of Medicare.

Does HRA include HSA?

Now, it was not clear from your question whether you’re still actively contributing to this account. Perhaps your current HRA no longer includes an HSA. But if it does, and you enroll in Part A of Medicare, you will no longer be able to actively participate in an HSA.

What is COBRA insurance?

COBRA is the acronym applied to continuation coverage that was made available through the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. [11] Private employers who offer EGHP coverage and who normally employed 20 or more workers on a typical business day during the preceding calendar year must offer COBRA coverage to employees and their dependents when they lose their EGHP-sponsored health insurance because of certain specified events. [12] Covered employees, or workers, are only eligible for COBRA based on termination of their employment or reduction in their hours. [13]

What are the qualifying events for Cobra?

The six qualifying events for COBRA coverage are defined in the statute as: 1 The death of a covered employee 2 The termination (other than for gross misconduct), or reduction in hours, of the covered employee’s employment 3 The divorce or legal separation of the covered employee from the employee’s spouse 4 The covered employee’s entitlement to Medicare 5 A dependent child’s losing dependent status 6 The filing for bankruptcy by a retiree’s former employer. [16]

What happens if you don't enroll in Medicare Part B?

Medicare Part B – The consequences of delayed Part B enrollment can be severe. Generally, the beneficiary who does not enroll during his or her initial enrollment period and who is not entitled to a SEP must wait to enroll in the next general enrollment period (January – March), with benefits starting on July 1 of that year. [6] Further, there is a 10% late enrollment penalty added to the standard monthly premium for every 12 months of delayed enrollment in Part B. [7] The penalty has no durational limit. [8]

What is a termination of a covered employee?

The termination (other than for gross misconduct), or reduction in hours, of the covered employee’s employment. The divorce or legal separation of the covered employee from the employee’s spouse. The covered employee’s entitlement to Medicare. A dependent child’s losing dependent status.

Do you have to enroll in Medicare if you have delayed enrollment?

Advocates have seen an increase in the number of Medicare beneficiaries who have delayed enrolling in Medicare Part B, thinking, erroneously, that because they are paying for and receiving continued health coverage under COBRA, they do not have to enroll in Medicare Part B. [1] COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period (SEP) to enroll in Part B after their COBRA coverage ends. [2] (They may, however, qualify for a SEP to enroll in Part D at that time if the drug coverage they had under COBRA constitutes creditable coverage.) [3] Only individuals who delay enrolling in Part B because they are covered under an employee group health plan (EGHP) by reason of “current” employment may take advantage of the SEP rules. [4] Individuals on COBRA do not meet the definition of having current employment status. [5]

Q. What are my options for healthcare coverage when I retire?

A. Your previous employer is required to provide you with a COBRA option to continue your health plan for a specified period of time, but enrolling onto a COBRA plan if you are eligible for Medicare may result in your being charged a penalty along with other potential issues.

Q. Should I accept COBRA and delay Medicare enrollment?

A. If you are Medicare eligible when you retire, you receive a Special Enrollment Period (SEP). The SEP allows you to enroll in Medicare Part B and Part D once you lose employer-sponsored coverage. The SEP lasts for a total of sixty (60) days from the date you lose coverage as an active employee of your employer.

Q. What is the Late Enrollment Penalty?

A. Those who do not enroll timely onto Medicare be delaying or enrolling onto COBRA instead will face a permanent penalty which will be added to their coverage costs.

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Who has jurisdiction over Cobra?

The U.S. Department of Health and Human Services, through the Centers for Medicare & Medicaid Services (CMS) has jurisdiction with respect to the COBRA continuation coverage requirements of the PHS Act that apply to state and local government employers, including counties, municipalities and public school districts, and the group health plans that they sponsor.

How long is Cobra coverage?

In certain circumstances, if a disabled individual and non-disabled family members are qualified beneficiaries, they are eligible for up to an 11-month extension of COBRA continuation coverage, for a total of 29 months. The criteria for this 11-month disability extension is a complex area of COBRA law. We provide general information below, but if you have any questions regarding your disability and public sector COBRA, we encourage you to email us at [email protected].

What is a Cobra notice?

A notice of COBRA rights generally includes the following information: A written explanation of the procedures for electing COBRA, The date by which the election must be made, How to notify the plan administrator of the election, The date COBRA coverage will begin, The maximum period of continuation coverage, The monthly premium amount,

How long does it take to get a Cobra notice?

Separate requirements apply to the employer and the group health plan administrator. An employer that is subject to COBRA requirements is required to notify its group health plan administrator within 30 days after an employee’s employment is terminated, or employment hours are reduced. Within 14 days of that notification, the plan administrator is required to notify the individual of his or her COBRA rights. If the employer also is the plan administrator and issues COBRA notices directly, the employer has the entire 44-day period in which to issue a COBRA election notice.

How long do you have to notify Cobra?

Qualified beneficiaries must be given an election period of at least 60 days during which each qualified beneficiary may choose whether to elect COBRA coverage.

What is the COBRA requirement?

Title XXII of the Public Health Service (PHS) Act, 42 U.S.C. §§ 300bb-1 through 300bb-8, applies COBRA requirements to group health plans that are sponsored by state or local government employers. It is sometimes referred to as “public sector” COBRA to distinguish it from the ERISA and Internal Revenue Code requirements ...

What is a Cobra election notice?

The COBRA election notice should contain the address to which premium payments should be sent and should be provided by the employer or group health plan administrator along with the amount of the premium due and its due date.

How to avoid paying for Cobra?

If you want to avoid paying the COBRA cost, go with a short-term plan if you're waiting for approval on another health plan. Choose a Marketplace or independent plan for broader coverage. Choose a high-deductible plan to keep your costs low.

When will Cobra insurance be 100%?

4. The U.S. government will cover 100% of COBRA premiums from April 1, 2021, to September 30, 2021, under the American Rescue Plan. Those who voluntarily left their job ...

What is the best insurance to get for Cobra?

ACA Marketplace Health Insurance. ACA plans are among the best options to COBRA for those seeking a health care plan. Under the ACA, you can get a health care plan through your state's health insurance Marketplace. This is a health plan shopping and enrollment exchange run by your state.

How long does Cobra last?

If your job ended or your hours were cut and you became eligible for Medicare 18 months before the event, COBRA coverage lasts up to 36 months after the date you became eligible for Medicare. 2.

How much is a high deductible health plan for 2021?

For the 2021 plan year, the IRS defines a high-deductible health plan as one with a deductible of at least $1,400 for one person or $2,800 for a family. 16.

How to avoid Cobra?

If you want to avoid paying the COBRA cost, go with a short-term plan if you're waiting for approval on another health plan. Choose a Marketplace or independent plan for broader coverage. Choose a high-deductible plan to keep your costs low.

Why is Cobra so expensive?

In most cases, COBRA has a high cost because you have to pay the full premium.