Medicare Insurance: Thinking of staying on Cobra because it’s easy, you know it, or maybe you have a spouse that’s under 65 and they still need coverage? Think again! Avoid the Part B Penalty! If you are eligible for Medicare and you are planning on retiring, be sure to follow the correct guidelines or you may be penalized by Medicare. Once you leave your employer group plan, and you are eligible for Medicare, you must take out Part A and Part B and pick up a Part D (drug) plan. Medicare gives you 8 months from the time you leave your group plan to get Part B in place, and this gives you a Special Enrollment Period which allows you to enroll in a Medicare plan. [You should have signed up for Part A when you turned 65, but if you didn’t, then you need to get that too.] If you pass this 8 months, then you cannot enroll into Part B until Medicare’s General Election Period, January 1st through March 31st and that will give you a Part B effective date of July 1st. Then you can add additional coverage effective July 1st also.
Part B Penalty: If you fall into the above situation and you end up taking Cobra, this is not considered creditable coverage, and you’ll have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it.
Under 65 Individual Health Insurance: If you are under 65 and you go on a Cobra plan, in most cases you will be fine and you will not have any penalty. This is considered creditable coverage under the ACA (Affordable Care Act) guidelines as long as that Cobra plan meets the ACA requirements of minimum essential coverage. Most Cobra plans meet these guidelines, but if you are concerned, just ask the Cobra Administrator to verify this and they can advise you. Be aware though, if you are mid-year and outside of open enrollment, and you decide to get off the Cobra plan, you cannot do that until the Open Enrollment period comes around again. Open Enrollment is November 1, 2017 – January 31, 2018. Cobra extends your coverage for 18 months and if you’re offered Cal-Cobra you have another 18 months. If you have either of these situations and your coverage runs out mid-year, then you will be able to get coverage through an individual plan or through Covered California because you’re not choosing to leave the plan, you are losing coverage. Basically the coverage has run its course and is ending. This gives you a Special Election Period and allows you to purchase new coverage within 60 days. If you miss the 60 day window, then you will get a penalty.