Staying On Employers Plan
Generally, if you remain employed and on your companys plan past age 65, you do not need to enroll in Medicare Part B . Medicare Part B has a monthly premium. Most individuals enroll in Part A . Part A is usually without cost.
Ending your employment and enrolling in your companys COBRA medical and prescription coverage may be an available option. But you need to beware that youre possibly creating a problem for yourself.
The government does not consider COBRA to be creditable medical coverage . Group medical insurance and prescription drug coverage from your employer, while you are employed, is typically considered creditable coverage. COBRA medical coverage is not, although COBRA prescription drug coverage may be.
What Is A Notice Of Creditable Coverage Form
Once you become eligible for Medicare Part D, your current insurer is required to let you know if your insurance provides creditable coverage for prescription drugs.
If your current insurance is creditable, youll receive a creditable coverage disclosure notice. Keep this letter. Youll need to show it to Medicare when you enroll to avoid having to pay late enrollment penalties.
If your current insurance is not creditable, youll receive a noncreditable coverage disclosure notice.
These notices typically mail out each September.
Insurance plans through Indian Health Services arent required to provide a Notice of Creditable Coverage form.
Medicare defines a large employer as any company that has 20 or more full-time employees. You may be covered through your own large employer or through your spouses large employer.
How Do I Defer Medicare If I Have Creditable Coverage
Many Medicare-eligible people have excellent insurance coverage they wish to keep, without signing up for Medicare. You have the right to defer Medicare enrollment.
If you have creditable coverage and dont want to sign up for Medicare, there are no forms to fill out. Simply dont sign up.
If you choose to sign up at a later date, you wont receive penalties or fees if you have current creditable coverage.
If you lose your current coverage, you should enroll in Medicare within 8 months. This is known as a special enrollment period. Not signing up during this window will cause you to incur late enrollment penalties.
Keep in mind that declining Medicare coverage when you are eligible will cause you to forfeit your Social Security or Railroad Retirement benefits.
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Can You Be On Medicare And Cobra At The Same Time
The Consolidated Omnibus Budget Reconciliation Act of 1985 helps employees extend benefits past employment. Qualifying events for COBRA include termination of employment or reduction in working hours. It is possible to have COBRA and Medicare coverage at the same time.
However, they dont coordinate the same way as employer coverage and Medicare. When you have COBRA, Medicare usually pays first, and COBRA pays second. However, its possible that your group insurance has special rules that will determine the primary payer. Refer to your plan document for details.
Its important to note that your COBRA coverage could be terminated before the maximum period if you become entitled to Medicare after electing to continue coverage.
Can You Have Cobra And Medicare At The Same Time
You can have COBRA and Medicare together if you were already enrolled in Medicare when you become eligible for COBRA. For example, if youre 67 years old and using a combination of Medicare coverage and coverage from your employer but then retire or scale down to part-time hours, you could be eligible for both COBRA and Medicare.
On the other hand, if you become eligible for Medicare while youre already enrolled in COBRA, your COBRA coverage will end. So, if you leave your job at age 64 and enroll in COBRA, your COBRA coverage will end when you turn 65 years old and enroll in Medicare.
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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. In this case, make sure to ask when your COBRA coverage will end, for if you become Medicare-eligible before the typical 18 months of coverage are up, its still possible for the COBRA coverage to end early.
This is very important because some people will wrongly assume that COBRA will continue, and they dont need Medicare at age 65. This isnt true. Once you become entitled to Medicare, COBRA primary coverage benefits will cease. In this situation if you fail to get Medicare when you become eligible, you could end up facing late enrollment penalties because you decide to later enroll in Medicare later on, if you have a costly medical incident and COBRA informs you theyre no longer providing primary coverage, you could end up shouldering the high medical bill yourself.
In short, if you have COBRA and then become eligible for Medicare, enrolling in Medicare on a timely basis is paramount.
Here are some key things about enrollment to keep in mind:
Eight Month Enrollment Period
Medicare will allow you an eight month period to enroll in Medicare Part B once you have lost your employment. If you wait until after this eight month period has expired, you may be subject to a late enrollment penalty. Enrollment in COBRA does not extend this eight month period. Even though COBRA can last 18 months or longer, it does not extend the eight month period to enroll in Part B.
I recommend to my clients that they enroll in Part B when they go on COBRA medical and prescription coverage. Or, at the latest, within eight months of losing their employment. That way there will be no penalty for late enrollment.
Your companys prescription drug coverage is usually considered creditable coverage. But, be sure by asking that question of your companys resource manager. I have the same advise if it is not creditable. Enroll in a prescription plan within eight months of leaving your employment. There will be no late enrolment penalty.
Let us know if you need more information creditable coverage.
Jake Young
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Will My Preexisting Conditions Be Covered By Medicare
It depends what coverage you have. For the first six months of coverage, Medigap insurance companies can refuse to cover extra costs from preexisting conditions. After six months, the Medigap policy will cover your pre-existing condition. For another option, you can join Medicare Advantage, even with preexisting conditions.
Cobra & Medicare: Do They Work Together
COBRA continuation coverage provides temporary continuation of health benefits at group rates for qualifying individuals and their dependents if coverage is lost based on a specific qualifying event, such as job loss, reduction of hours, divorce death, or qualifying for Medicare coverage. If you qualify for Medicare coverage based on age and are also eligible for COBRA, whether you can have both COBRA and Medicare coverage will depend on which coverage you have first.
If You Have COBRA Before Enrolling In Medicare
If you are already enrolled in COBRA coverage when you choose to enroll in Medicare, your COBRA coverage will usually end on the date of your Medicare enrollment. Though COBRA coverage will end once you enroll in Medicare, it is recommended that you enroll in Medicare during your initial enrollment period . This is because you are not entitled to a separate enrollment period for Medicare once your COBRA coverage ends. If your initial Medicare enrollment period has ended before your COBRA coverage ends, you will have to wait until the next Medicare annual enrollment period to enroll in Medicare. Waiting rather than enrolling when you first become eligible can make you subject to paying a higher Part B premium.
Overlapping Enrollment Eligibility
Dual Enrollment
Making the Best Choice
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Is Cobra Considered Creditable Coverage For Medicare
To avoid penalties, you must have . This means coverage thats at least equivalent to Medicare. COBRA is NOT creditable coverage. If youre Medicare-eligible and have COBRA, you should enroll in Part B.
COBRA extends group benefits for a set period of time up to 18 months. Its rare for COBRA to be the best option for a Medicare-eligible person. You can usually get better coverage for less money than COBRA.
Should I Enroll In Medicare
If you have creditable coverage and are eligible for Medicare, you wont receive a penalty if you postpone Medicare enrollment.
However, many people do enroll in at least Part A, since its typically premium-free and may reduce hospitalization costs.
Some people also choose to enroll in Part B as soon as theyre eligible. If the monthly Part B premium is less than what youre paying for your current plan, this may be a better option for you.
If you enroll in Medicare, have creditable coverage, and keep your insurance, your current provider would be your primary insurer. Medicare would be your secondary insurer.
You may decide to let your current insurance lapse.
Before you do, make sure to compare your current out-of-pocket costs to those associated with Medicare to see which plan offers you the best and least expensive coverage.
It may also help to compare your:
- deductibles
- copays
- premiums
You must also ensure that you have prescription drug coverage, either through your current insurance plan or through a Part C or Part D plan to avoid penalties.
When and whether you should sign up for Medicare can be a challenging decision, especially if you dont know the specifics of your current coverage. Talking with your plan provider directly or reaching out to your local State Health Insurance Assistance Program can help clarify the details, so you can decide which coverage option is best for you.
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What Is Creditable Coverage For Medicare Part D
Prescription plans are the most common type of creditable coverage. A plan is creditable for Part D as long as it meets four qualifications.
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Caution
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. COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period to enroll in Part B after their COBRA coverage ends. Only individuals who delay enrolling in Part B because they are covered under an employee group health plan by reason of current employment may take advantage of the SEP rules. Individuals on COBRA do not meet the definition of having current employment status.
Consequences
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 , with benefits starting on July 1 of that year. Further, there is a 10% late enrollment penalty added to the standard monthly premium for every 12 months of delayed enrollment in Part B. The penalty has no durational limit.
About COBRA
The six qualifying events for COBRA coverage are defined in the statute as:
Reminder
It is important that people with Medicare are advised about COBRA rules and about the circumstances under which they can use a SEP to avoid a late enrollment penalty.
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Why Cobra Is Not Creditable Coverage
Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage Why COBRA is Not Creditable Coverage
Is It Creditable For Original Medicare
VA health insurance doesnt qualify as creditable coverage for original Medicare .
Keep in mind that your VA coverage and your Medicare coverage can work together, if you choose to have both. The VA pays for services you receive at a VA facility, and Medicare pays for services you receive at a non-VA facility.
However, youll still have to pay for Medicare cost sharing such as deductibles or copayments even if you have VA coverage.
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What Is Creditable Coverage For Medicare Part B
Delaying Part B enrollment is common. Creditable coverage usually comes from a current employer plan. The Part B penalty increases incrementally for every year you lack creditable coverage.
Thus, you pay the penalty cost plus your premium when you finally enroll in Part B.
The Medicare Modernization Act requires insurers, whose policies may or may not include prescription drug coverage, to notify Medicare-eligible policyholders whether their coverage is considered creditable coverage.
What Is Medicare Creditable Coverage
October 4, 2019 By Danielle Kunkle Roberts
Every day, seniors are deciding to work past 65. Because thesenior working population continues to grow, more people are asking thequestion, What is Medicare creditable coverage?
Medicare creditable coverage is coverage that isconsidered to be just as good as Medicare, meaning that the coverage pays aswell as Medicare does. When someone has creditable coverage for Medicare, hecan delay enrollment in Medicare without owing a late enrollment penalty.
There are a few forms of creditable coverage for Medicare. However, the most common form of creditable coverage is a large employer group plan. Below, we will discuss the forms of creditable coverage and how they work with Medicare.
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How To Delay Medicare When You Have Creditable Coverage
Delaying Medicare is much easier than people expect it to be. First, figure out which parts of Medicare you have creditable coverage for. When you have creditable coverage for each part of Medicare, you can skip the Medicare enrollment process altogether.
The tricky part comes when its time to enroll in Medicare.
Once you lose your creditable coverage, youll want to go to your local Social Security office and apply in person. Be sure to take your Notice of Creditable Coverage. This notice will exempt you from having to pay any late penalties that may have accumulated.
You may need to request a more recent notice from your employer that shows you had creditable coverage for each part of Medicare your delay for the entire time you delayed them.
Remember, just because you have creditable coverage for Medicare, doesnt mean that the coverage you have is more cost-effective than Medicare. With Medicare, you may be able to get better coverage for lower premiums. You can call our team to compare Medicare options to your employer coverage.
Notice Of Creditable Coverage For Medicare Part D
Please read this notice carefully and keep it where you can find it.
This notice has information about your current prescription drug coverage with the State of Wisconsin or Wisconsin Public Employers Group Health Insurance Program and about your options under Medicares prescription drug coverage. This information can help you decide whether or not you want to join a Medicare drug plan under an individual policy. If you are considering joining, you should compare your current coverage, including which drugs are covered at what cost, with the coverage and costs of the plans offering individual Medicare prescription drug coverage in your area. Information about where you can get help to make decisions about your prescription drug coverage is at the end of this notice.
There are two important things you need to know about your current coverage and Medicares prescription drug coverage:
For More Information About This Notice or Your Current Prescription Drug Coverage Contact either Navitus or ETF.
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Those Receiving Cobra Coverage Must Sign Up For Medicare Part B At 65 To Avoid Penalty
If you are receiving health coverage from your employer when you reach age 65, the age at which most people enroll in Medicare, you may be able to delay enrolling in Medicare Part B without penalty, depending on your coverage. But not if your employer health coverage is being continued under COBRA. If this is the case, you must sign up for Medicare Part B when you first become eligible, and perhaps for Part D as well, to avoid penalties.
The Consolidated Omnibus Budget Reconciliation Act of 1985 provided that workers who have health care from a private employer with 20 or more workers can continue their health care coverage for up to 18 months if their employment is terminated or their hours are reduced. The Center for Medicare Advocacy reports that advocates are seeing an increase in the number of individuals who have delayed enrolling in Medicare Part B under the mistaken impression that paying for and receiving continued health coverage under COBRA allows them to enroll in Part B after their COBRA coverage ends without penalty. In fact, only those who delay enrolling in Part B because they are covered under a group health plan and are currently employed can avoid the penalty.
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The penalty for delaying enrollment in Part D, as the Center explains it, is 1 percent of the national base beneficiary premium in a given year times the number of full, uncovered months of eligibility without other creditable drug coverage.
