There has been growing attention to a problematic rule in receiving Medicare coverage right after COBRA coverage ends. As consumers are unaware of this problem, many are faced with gaps in coverage and extra fines according to AARP.
Current laws allow people who are eligible for Medicare but still work to stay on their employers’ group health insurance plans. Once a person retires, they are granted a special enrollment period to sign up for Medicare Part B for eight months without a penalty.
Yet once people retire, they can opt to extend their group coverage through COBRA for a year. While on COBRA, the enrollment period for Medicare Part B usually expires. So then consumers must wait for the open enrollment period from January 1 to March 31 each year. Still that coverage does not start until July — leaving consumers with a gap in coverage and with a penalty for late enrollment.
The president of the Medicare Rights Center, Joe Baker said, “It"s clear from the number and types of calls we get on our hotlines that there is a lot of confusion about how Medicare works with COBRA. Not only are individuals confused, but employers are as well, and the price of the confusion can be devastating for some.”
The confusion lies in the fact that once a person eligible for Medicare stops working, they have eight months to sign up for Medicare. On COBRA coverage, people are not working and are then not eligible for that special enrollment period after the COBRA coverage ends.
Some people choose to keep their group health insurance benefits through COBRA but it is important to remember that COBRA is only a temporary program. It is much better to get on a more permanent plan like Medicare to avoid enrollment late fees and gaps in coverage.