UPDATED 2-14-2020 – From the 2020 MEDICARE AND YOU Handbook:
COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, retiree health plans, VA coverage, and individual health coverage (like through the Health Insurance Marketplace) aren’t considered coverage based on current employment. You aren’t eligible for a Special Enrollment Period to sign up for Medicare when that coverage ends. To avoid paying a higher premium, make sure you sign up for Medicare when you’re first eligible. To learn more about enrollment periods, visit Medicare.gov, or call 1-800-MEDICARE (1-800-633-4227).
COBRA is NOT creditable coverage for Medicare Part B, and this has been causing problems for many who are getting clobbered with higher costs when they decide to enroll in Medicare Part B at a later time.
Under current law, COBRA coverage does not count towards creditable prior coverage for Medicare Part B, which means that when your COBRA ends and you decide to sign up for Medicare Part B after the date you originally could have joined, you will face a 10% per year for life penalty on the cost of Part B.
Surprisingly, COBRA may be considered creditable coverage when it comes to Medicare Part D – the drug coverage portion of Medicare. Because of this inconsistency, there was is a bill before Congress that attempted to correct this problem called H.R. 5104 and the legislation would allow seniors enrolled in COBRA coverage to transition to Medicare Part B without a penalty. Unfortunately this bill died in congress and was not enacted.
Please be aware of this issue if you are faced with this decision of taking COBRA coverage or enrolling in Medicare.
Visit our website for more information about Medicare supplements or other senior insurance. If you want to discuss your options, please email or give us a call at (631) 207-1800 and we would be happy to help.