The relationship between COBRA continuation and Medicare can often cause confusion. At times Medicare entitlement (enrollment) can trigger a need to offer COBRA, but at other times it can trigger a termination of COBRA coverage. We hope to provide clarification on when Medicare triggers an offer of COBRA, when Medicare causes an early termination of COBRA, and when COBRA can be extended for dependents due to Medicare entitlement.
When does Medicare coverage begin?
Individuals can become eligible for Medicare for a variety of reasons, including age, disability, or end-stage renal disease (ESRD). When individuals become eligible for Medicare due to age, coverage may be effective the first of the month of an individual’s 65th birthday, or it can be delayed and effective at a later date. If under 65, individuals can enroll in Medicare after receiving 24 months of Social Security Disability.
If enrolling in Medicare at any time other when first eligible, individuals generally can enroll:
- Between January 1 – March 31st annually (coverage begins July 1st)
- During a Special Enrollment Period (created by the earlier of an end of employment or end of coverage as an active employee under a group health plan)
What if I enroll in Medicare while actively employed and I cancel my family coverage, will my spouse and dependents be offered COBRA and if so for how long?
If an active employee cancels their employer sponsored coverage after enrolling in Medicare, that is considered a voluntary drop in coverage and the spouse and dependents would not be offered COBRA.
I thought Medicare entitlement is a 36 month event for the spouse or dependent, why is my spouse not offered 36 months of COBRA if I cancel my employer sponsored coverage when I enroll in Medicare?
An employee is not losing eligibility to the employer sponsored health plan when they enroll in Medicare, so it is not a COBRA qualifying event. Medicare would be secondary to the coverage provided by the employer and can remain enrolled in both plans. The employee would need to stay on the employer sponsored health plan to keep your spouse covered, and if they voluntarily drop the plan there is no offer of COBRA.
What if my COBRA election is followed by Medicare entitlement?
If a COBRA qualified beneficiary (QB) becomes Medicare entitled (eligible and enrolled), the COBRA coverage will terminate early for the individual who becomes Medicare entitled. Unless otherwise specified under state law, this generally includes all plans under the COBRA coverage even though Medicare does not cover many of the same services as dental and vision coverage for example. Any other family members covered under the plan can remain covered up to the maximum 18-month continuation period. Enrolling in Medicare while on COBRA does not provide a 36 month event for the spouse and/or dependents who were covered at the time of Medicare entitlement.
What if Medicare entitlement for individuals is followed by a COBRA election?
An individual, who is Medicare entitled (eligible and enrolled), can be offered COBRA due to a reduction in hours or termination. When this occurs, COBRA can remain in place for up to 18 months. This is true provided an individual is enrolled in Medicare prior to electing to continue coverage under COBRA.
What if Medicare entitlement is followed by a COBRA election for covered dependents?
In the case where an employee loses eligibility due to reduction in hours or termination within the 18-month period of first becoming Medicare entitled, a special Medicare extending rule applies to spouses and dependents who are qualified beneficiaries and are enrolled in coverage at the time of reduction in hours or termination of employment. A spouse or dependent would be eligible to remain on COBRA coverage until the later of:
- 18 months from the loss of coverage due to the reduction in hours or termination.
- 36 months from the date the employee first became Medicare entitled.
What if I enroll in Medicare Part A and Part B at different times?
Many working individuals who are Medicare eligible enroll in Medicare Part A when first eligible, but may delay enrollment in Part B until after they are no longer actively working and covered by a group health plan. In this case, the Medicare entitlement date is the date in which the individual began coverage under Part A. The date they become enrolled in Part B would not have an impact on COBRA eligibility.
What coverage is primary?
If an individual is enrolled in both COBRA continuation coverage and Medicare, Medicare will generally pay first (primary payer) and COBRA continuation coverage will pay second. Certain plans may pay as if secondary to Medicare, even if they are not enrolled in Medicare.
Bottom Line: Qualified beneficiaries should be sure to review their COBRA Rights Notice carefully to understand their rights with Medicare and COBRA. This notice will also provide details on the notification requirements of the qualified beneficiary.