Medicare Coverage Mistake

Thousands of people make a serious Medicare coverage mistake because they don’t know the rules.  They think they don’t need to sign up for Part B of Medicare (and pay a premium) because they have COBRA, or a retiree plan, or VA benefits.

I just ran into this last week and I prevented a lady from making a bad Medicare coverage mistake.

Sue (not her real name) has COBRA now and it covers certain things that Medicare, apparently, does not cover.  She will turn 65 in June and she said she preferred to continue her COBRA because she thinks it is better than Medicare.

When the question of continuing COBRA came up, I said I have had clients whose COBRA covered their expensive drugs much better than Medicare Part D. But I recalled that there were some complications to using COBRA and…. of course, I could not remember them.

Fortunately, I had my laptop with me so I googled “Medicare and COBRA”.  After looking through several websites, I found one that clearly stated that a person turning 65 needs to enroll in Medicare Part B even though they have COBRA coverage. That’s because you can only delay Part B enrollment if you are covered by health insurance that is based on current employment.

From the Center for Medicare Advocacy website:

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.

What a coincidence! Today I came across an article from Kaiser Health News that addressed this same issue. The headline was:  COBRA, Retiree Plans, VA Benefits Don’t Alleviate Need to Sign Up For Medicare.

I just emailed this article to Sue’s husband who will turn 65 in March and is also on COBRA.  When I left him last week, I told him to tell his wife she was going to “have to bite the bullet and sign up for Medicare”.  But I wasn’t sure she would believe me.

The article gives examples of several people who ran into big trouble when they used COBRA or a retiree health plan after they turned 65.  They each paid a big price for their Medicare coverage mistake.  One example from the article:


Withers thought the health plan he purchased through his old employer would count as job-based coverage, but COBRA is not a substitute for Medicare Part B, a point no one mentioned when he submitted his paperwork. He should have signed up for Part B when he left his previous job.

“How could there be a rule that no one knows about?” Withers asked.




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