Are you eligible for COBRA at age 65? Your guide to navigating COBRA and Medicare

According to the Department of Labor, COBRA requires group health plans to offer temporary continuation coverage in certain instances where coverage would otherwise be lost. If you're approaching 65 and facing a job loss or retirement, you may be wondering: Are you eligible for COBRA at age 65? Understanding the complex rules surrounding COBRA and Medicare is crucial for avoiding costly mistakes and coverage gaps.

Quick Summary

COBRA eligibility does not have an age limit, but once you become eligible for Medicare at age 65, your options and responsibilities change. Enrolling in Medicare is mandatory to avoid lifelong penalties, and COBRA coverage will likely end or shift to a secondary role. The timing of your Medicare enrollment and your election of COBRA is critical to ensure seamless, penalty-free health coverage.

Key Points

• Age isn't a barrier: There is no upper age limit for COBRA eligibility, but becoming eligible for Medicare at age 65 fundamentally changes how COBRA can be used.

• Enroll in Medicare at 65: When you turn 65, you must enroll in Medicare Part B, regardless of whether you have COBRA. Failing to do so will result in lifelong late-enrollment penalties.

• COBRA ends as primary coverage: If you have COBRA and then become eligible for Medicare, your COBRA coverage will likely terminate its role as primary insurance.

• COBRA can be secondary to Medicare: If you already have Medicare when you become eligible for COBRA (e.g., you retired while already 65+), you can elect COBRA to act as secondary coverage.

• Weigh the high cost of COBRA: COBRA is typically much more expensive than Medicare, as you must pay the full premium plus an administrative fee. Compare costs carefully.

• Spouse and dependents may get longer COBRA: If you become Medicare-entitled, your spouse and dependents may be able to continue on COBRA for up to 36 months, which can be a valuable option for family coverage.

• Consider all options: Before electing or retaining COBRA at age 65, evaluate all your choices, including Original Medicare, Medicare Advantage plans, and Medigap policies.

Can I Elect COBRA at Age 65?

Yes, you are eligible for COBRA at age 65, provided you meet the standard eligibility requirements. Age is not a limiting factor for COBRA. The decision to elect COBRA at this age, however, is heavily influenced by your eligibility for Medicare and the specific timing of these two events.

COBRA is a federal law that allows you to continue your health coverage from a previous employer for a limited time, typically up to 18 months for job loss or reduction in hours. The coverage is identical to what active employees receive, but you are responsible for the full premium plus a 2% administrative fee, which is often significantly higher than what you paid as an employee.

The Intersection of COBRA and Medicare

When you turn 65, your eligibility for Medicare significantly changes the dynamic of your health coverage options. The coordination between COBRA and Medicare depends on which program you become eligible for first.

• You Have COBRA, Then Turn 65: If you are on COBRA coverage and then become Medicare-eligible, your COBRA primary coverage will end. You must enroll in Medicare Part A and Part B to avoid penalties and ensure you have primary health coverage. Your former employer's plan may terminate your COBRA benefits once you become entitled to Medicare.

• You Have Medicare, Then Become COBRA-Eligible: If you are already enrolled in Medicare when a qualifying event (like job loss) makes you eligible for COBRA, you can have both. In this case, Medicare will be your primary payer, and COBRA will become your secondary payer. This can be beneficial for covering costs that Medicare doesn't, but you will pay the full COBRA premium.

The Critical Importance of Timely Medicare Enrollment

Delaying your Medicare enrollment is a common and costly mistake for people over 65 who elect COBRA. COBRA is not considered creditable coverage that allows you to defer Medicare Part B without penalty once you've stopped active employment. You have a special enrollment period to sign up for Medicare after leaving your job. Missing this window can result in:

• Permanent Late Enrollment Penalties: For every 12-month period you were eligible but not enrolled in Medicare Part B, your monthly premium will increase by 10% for the rest of your life.
• Coverage Gaps: If you miss your enrollment window and don't enroll in Medicare, you could be left with no primary health coverage, as your COBRA benefits will terminate upon Medicare entitlement.

COBRA vs. Medicare: A Comparative Analysis at Age 65

When you're turning 65, it's essential to compare your COBRA and Medicare options carefully. Your former employer's HR department or a State Health Insurance Assistance Program (SHIP) can provide valuable guidance.

Feature	COBRA (at Age 65)	Medicare (Age 65)
Coverage Duration	Limited, typically 18 months for job loss; often ends upon Medicare entitlement.	Lifelong, as long as premiums are paid.
Cost	Often very expensive, covering 102% of the plan's cost.	Generally lower, with most paying no premium for Part A and an affordable monthly premium for Part B.
Primary Payer	Can be primary before Medicare entitlement; becomes secondary afterward.	Always the primary payer for health services.
Provider Choice	Limited to your former employer's network.	Original Medicare allows you to see any provider that accepts Medicare. Medicare Advantage plans have network restrictions.
Late Enrollment Penalties	Electing COBRA does not protect you from Medicare penalties if you delay Part B.	Significant and lifelong penalties for delaying enrollment without creditable coverage.

Conclusion

At age 65, while you technically remain eligible for COBRA, relying on it as a long-term solution is generally ill-advised and can be financially risky. The moment you become entitled to Medicare, your COBRA status changes, and it ceases to be your primary coverage. It is paramount to enroll in Medicare Part B during your initial enrollment period to avoid lifelong penalties and coverage gaps. Choosing to run both coverages, with Medicare as primary and COBRA as secondary, is an option, though an expensive one that should be weighed against alternatives like a Medigap policy. By understanding how these two insurance options interact, you can make an informed decision that secures your health and financial well-being in retirement.

Helpful Resources

• Medicare.gov: Your official source for understanding Medicare benefits and enrollment rules.
• U.S. Department of Labor: Provides detailed information on COBRA continuation coverage rules and notices.
• State Health Insurance Assistance Program (SHIP): Offers free, one-on-one counseling to help you understand your Medicare options.

Footnotes

Fair Square Medicare. "Turning 65 and Thinking of Keeping COBRA? Here's Why It..." Fairsquaremedicare.com. [Online]. U.S. Department of Labor. "An Employee's Guide to Health Benefits Under COBRA." Dol.gov. [Online]. UnitedHealthcare. "Medicare and COBRA." Uhc.com. [Online]. Healthline. "COBRA and Medicare Together: What to Know." Healthline.com. [Online].

Frequently Asked Questions

Can I have both COBRA and Medicare at the same time?

Yes, you can have both COBRA and Medicare, but how they work together depends on the timing. If you are already on Medicare, COBRA can serve as secondary coverage. If you are on COBRA and then become Medicare-eligible, you must enroll in Medicare as your primary insurance, and your COBRA may terminate or become secondary.

What happens to my COBRA coverage when I turn 65?

When you turn 65 and become entitled to Medicare, your COBRA coverage typically ends its role as primary insurance. It is crucial to enroll in Medicare Parts A and B during your Initial Enrollment Period to avoid penalties and coverage gaps.

Will I face a penalty if I take COBRA instead of enrolling in Medicare at 65?

Yes, you can face significant and lifelong late-enrollment penalties if you fail to enroll in Medicare Part B when first eligible at age 65. COBRA is not considered creditable coverage for avoiding these penalties once you are no longer actively employed.

Which one is more expensive, COBRA or Medicare?

In most cases, COBRA is significantly more expensive than Medicare. With COBRA, you pay the entire premium, including the portion your former employer subsidized, plus an administrative fee. Medicare typically has lower monthly premiums, especially for Part A, though costs vary depending on the plan.

What happens if I retire at 64 and take COBRA, but then turn 65 during my COBRA period?

If you are on COBRA and turn 65, you must sign up for Medicare during your Initial Enrollment Period. Your COBRA benefits will likely end once your Medicare coverage begins. Waiting until your COBRA ends to enroll in Medicare could lead to costly penalties and coverage gaps.

Is retiring at age 65 a qualifying event for COBRA?

Yes, retiring is considered a qualifying event for COBRA. This means you have the right to elect COBRA continuation coverage. However, your decision must be made in conjunction with your Medicare enrollment, which takes precedence once you turn 65.

Can my spouse stay on COBRA if I become eligible for Medicare?

Yes. If your spouse and/or dependents are on your plan, your becoming entitled to Medicare is considered a 'qualifying event' for them. This allows your family members to elect COBRA for up to 36 months, even if your own COBRA coverage ends.

Where can I get more help with my COBRA and Medicare options?

You can consult with a State Health Insurance Assistance Program (SHIP), which offers free counseling services. Additionally, your former employer's benefits administrator can provide specific information about your COBRA plan options.