COBRA is a powerful type of insurance that’s beneficial for people who are in between coverages. However, people with this protection may already have Medicare and wonder if COBRA applies to them and if they can use it if they lapse. At Senior Insurance Solutions, we can help you understand how COBRA works with Medicare and why it’s such an excellent option for seniors like you. You deserve to know exactly how this tool can help you stay insured.
By understanding these insurance types, you can make informed coverage decisions and avoid running into serious complications. In this article, you’ll learn more about COBRA, its benefits, and how it works well together with Medicare to provide excellent protection. When you’re done reading this informative post, you’ll have a good idea of whether or not you need COBRA with your Medicare and how you can pair them up for the maximum coverage benefits.
What is COBRA?
Continuation of Health Coverage or COBRA is part of the Consolidated Omnibus Reconciliation Act and is designed to give workers and their families healthcare benefits after they lose insurance. The goal of this program is to provide a helpful transition after losing a job, getting a reduced work schedule, or looking for a job. It’s also beneficial when a primary beneficiary of a health insurance policy dies or leaves their partner, and the latter no longer has insurance.
Here’s one example scenario where it might be helpful. An individual works for a company that provides an excellent health insurance policy, but they need to quit due to personal reasons. With COBRA, they can keep that protection for a period after offboarding from their job. Typically, those who qualify pay their entire premium for coverage up to 102% of the cost of the plan, meaning that they pay for the protection out of their own pocket while keeping it.
When Cobra is Available
All group healthcare plans provided by private-sector employers with 20 or more employees fall under this heading. However, it doesn’t apply to the Federal Government or church-based businesses. Some states provide mini-COBRA policies for companies under 20 that help fill in the gap. Those who want any type of COBRA plan must fall under specific qualifying events that trigger COBRA. Just a few instances in which they might get COBRA include:
- Loss of a job for reasons beyond gross misconduct, meaning you can get COBRA if you were fired from a job for reasons such as a lack of need for your position
- Drastic reduction in your hours that makes you unqualified for healthcare, typically below 38 hours or more in four weeks
- Being married to someone who loses their job for any reason beyond gross misconduct, meaning spouses can keep their care
- Being married to someone who has dramatically reduced work hours that disqualifies them from getting insurance anymore
- Death of the covered employee that leaves a family or partner without health insurance and unable to find more
- Divorce or legal separation from a covered employee that leaves a family without excellent health insurance options
- Loss of dependent status under the policy, which means that a policyholder’s child reaches 26 years of age
- Reaching Medicare age while you are employed and temporarily losing your insurance or getting lower-quality benefits for a period
If you qualify for COBRA coverage, you will get an election period of at least 60 days (starting from the last date you had coverage). Availability will vary depending on whether you want to pay the premium for the policy or not. Maintaining it is often a better choice for those with Medicare who lapse and need a little extra protection to avoid severe financial losses.
Are There More Pros Than Cons?
COBRA protection is just like any kind of extra or supplemental policy; it has benefits and disadvantages. Understanding these bonuses and drawbacks is very important for seniors with Medicare. After all, there are other ways of getting protected if their coverage lapses and they aren’t sure where to turn. Thankfully, there are generally more pros than cons of COBRA, including the following advantages that make it well worth considering for your needs:
- Broad Plan Availability: Often, group health plans aren’t available in the private marketplace, meaning COBRA lets you keep a plan you couldn’t otherwise get yourself.
- Better Maternity Benefits: most group health insurance plans offer better maternity or childbirth advantages than other policies, making COBRA an intelligent choice.
- Medicare Transition: If your plan ends before your official Medicare coverage date but you start Medicare within its term limits, COBRA can keep you fully insured.
- Health Protection: People who need diabetes medications and other types of expensive support need COBRA to stay healthy after losing a job.
While these pros make COBRA a good choice for people with Medicare, there are a few problems that should be understood before using it to fill in a gap in coverage. These are usually pretty minor compared to the advantages, but knowing them can help seniors avoid making a mistake in their coverage. Just a few negatives that you might experience when trying to utilize this protection option for your gaps in Medicare protection include:
- Costlier: You’ll have to pay a fairly high rate compared to the initial coverage, usually up to 102%, as defined earlier. You may even pay a 2% administration fee for continuation.
- Eligibility Limits: COBRA protection doesn’t last forever but does provide up to 18-36 months of protection. The 60-day limit mentioned earlier is your application period.
- Lack of Coverage: If you work for a company that has less than 20 employees, COBRA might not be available for you. However. mini-COBRA is available in Colorado!
So while COBRA does have limitations, its advantages are far more considerable. For example, knowing that you have insurance between jobs is excellent, especially if it takes over a year to find a new one. Furthermore, having a little extra protection after getting on Medicare or having a gap in your insurance might be huge. Before making a choice, it’s critical to take a deeper look at this subject to ensure you’re not making an expensive investment that isn’t right for you.
Should You Use COBRA If You Have Medicare?
According to AARP, you need to sign up for Medicare Parts A and B if you’re 65 years or older, even if you’ll use COB RA to extend your health insurance after leaving a job. Doing so could cause late enrollment penalties and coverage gaps that could impact your protection. Just like with those under 65, your coverage will remain the same, but your premiums should jump. There are a few considerations to keep in mind if you plan on using COBRA in this way:
- Starting Cobra Before You Hit 65: Here’s a tricky point that might be a little contentious for many people: starting COBRA before you hit 65. If you have COBRA benefits before you hit 65, they end when you hit this age. They’ll end regardless of the months left on your policy. Furthermore, you must sign up for Medicare during your initial enrollment.
- Beginning COBRA After 65: Once you hit 65, you need to sign up for Medicare by a specific period to avoid fees. However, you can also sign up for COBRA if you leave your job after 65. That said, you’ll get penalties if you don’t sign up for Medicare: you can avoid Medicare penalties and use COBRA only if you or your spouse are working.
- Signing Up for Medicare: You must signup for Medicare during the initial enrollment period. This availability includes three months before your 65th birthday and three months after. If you sign up after this time, you’ll accrue penalties. COBRA can be useful for you to keep benefits before that time, though typically you can’t keep both.
- Finding Prescription Drug Coverage: The rules differ for Medicare Part D prescription plans and COBRA. If you have COBRA plans that are considered as good as Part D, you don’t have to get Part D coverage as long as you have a COBRA policy from a previous employer. After losing it, you get 63 days to sign up for Part D.
- Getting Medigap Plans: You can buy any Medigap option in Colorado within six months of signing up for Medicare Part B coverage. Doing it before or after will either cause rejection or increase your rate. You must exhaust COBRA before getting the issue right when more than six months have passed since signing up for Medicare Part B.
The TL:DR version of this list is that you must sign up for Medicare Part B within your enrollment period to avoid penalties, regardless of your COBRA status. If you have COBRA before you hit 65, you lose this protection the moment you hit 65. However, qualifying for COBRA after you hit this age lets you keep it, though you do get penalties for not signing up for Medicare Part B. Lastly, it’s essential to sign up for Medicare Part D within 63 days of losing COBRA policies.
How We Can Help You
Our team at Senior Insurance Solutions is here to help you better understand your Medicare and COBRA policies. We’ll pair you with a licensed insurance agent who can talk with you about your Medicare plans to help you identify which option works best for you. There are five plans available, including Medigap types from private lenders, that we can help you find. Here’s a brief look at the five main coverage options available to people who qualify for Medicare:
- Part A: Also known as Hospital Insurance, this Medicare coverage helps pay for costs associated with inpatient hospital care, hospice therapy, home health support, and skilled nursing facility attention. This plan is best for people who need hands-on healing.
- Part B: Part B covers outpatient hospital care, preventative therapies, home health care support, and durable medical equipment, like specialized beds and wheelchairs. We can help you pair it up with Part A to provide comprehensive medical service for your needs.
- Part C: Part C helps people who can’t afford Part A and Part B by collecting them into a single plan for easier access. Though it doesn’t provide every benefit from both, it does expand protection to include vision and routine dental care not covered by A or B.
- Part D: This plan type covers your prescription drugs and medications, including shots and vaccines. They’re offered by private firms, meaning that you can add them to your government-provided Medicare plans. We’ll help you balance your budget effectively.
- Supplemental: Supplemental or Medigap policies are available from various private companies that help cover a portion of other types of costs. It pays for things that don’t get protected in your other Medicare plans, such as specific types of specialist care.
Please come to us if you’re in your Medicare enrollment period and have COBRA coverage. We’ll help sort through the confusion and make it easier for you to find a policy that works for you. We know that narrowing your options down can be difficult, which is why we provide a Medicare resource center for all our clients. You can also check our useful blog to learn more about topics like whether you can lose Medicare eligibility and how it helps with chronic pain.
Contact Us to Get Support
At Senior Insurance Solutions, our team of specialists is more than ready to help you understand not only your Medicare plans but COBRA as well. No matter what kind of support you need, we’re very happy to help you. With our team of experts on your side, it should be easier than ever to find affordable insurance solutions that fit into your budget.
We come packed with many years of experience under our belts and a true love of what we do. Medicare coverage is never easier than when you talk with us – we’re here for you! So, use our contact form here or call us at (719) 440-4242 to learn more about how our team can help you stay healthy. With our help, you can better understand your COBRA and Medicare coverage.
