Retirees Still Considered Covered Employees
If an employer offers retiree health coverage that is a non-COBRA alternative to COBRA coverage for eligible retirees, then the retirees are still considered covered employees for COBRA purposes.
Furthermore, the Medicare statutory rules allow employer-sponsored group health plans to reduce or terminate coverage if retired employees become entitled to Medicare. Thus, if a covered retiree becomes entitled to Medicare, and that entitlement would cause a loss of coverage for his or her spouse and dependents under the terms of the employers retiree coverage, then a qualifying event has occurred.
When Medicare entitlement is a qualifying event, COBRA requires that affected qualified beneficiaries be allowed to elect up to 36 months of COBRA coverage from the date of Medicare entitlement. However, the group of affected qualified beneficiaries consists only of the spouse and any dependent children. Employers should analyze how Medicare entitlement will affect the offering of retiree plans as alternative coverage.
Example. Active employee George retires. He and his family choose a retiree plan and waive COBRA. When George becomes entitled to Medicare, and if Medicare entitlement results in a loss of coverage under the retiree plan for Georges family, then his family must be offered 36 months of COBRA under the retiree plan from the date of Medicare entitlement.
Retirees May Use Cobra Insurance For 18 Months
Your mom would be eligible for COBRA continuation when she retires. Retirement is a qualifying event. When a qualified beneficiary retires from their job, the retired worker is entitled for up to 18 months health insurance continuation, which is the maximum amount of time an employee can keep COBRA continuation.
If the employee retires and is entitled to Medicare on the same date, then their spouse or dependent would be eligible to continue on their group health plan for up to 36 months.
Cobra: 7 Important Facts
| Avoid gaps in coverage & the Part B late enrollment penalty |
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If you have COBRA before signing up for Medicare, your COBRA will probably end once you sign up. You have 8 months to sign up for Part B without a penalty, whether or not you choose COBRA. If you miss this period, you’ll have to wait until January 1 – March 31 to sign up, and your coverage will start July 1. This may cause a gap in your coverage, and you may have to pay a lifetime Part B late enrollment penalty. |
In general, COBRA only applies to employers with 20 or more employees. However, some states require insurers covering employers with fewer than 20 employees to let you keep your coverage for a limited time.
In most situations that give you COBRA rights , you should get a notice from your employer’s benefits administrator or the group health plan. The notice will tell you your coverage is ending and offer you the right to elect COBRA continuation coverage.
COBRA coverage generally is offered for 18 months . Ask the employer’s benefits administrator or group health plan about your COBRA rights if you find out your coverage has ended and you don’t get a notice, or if you get divorced.
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If You Have Retiree Health Benefits
- You canât get premium tax credits and other savings based on your income. This is true only if youâre actually enrolled in retiree coverage. If youâre eligible for but not enrolled in retiree coverage, you may qualify for premium tax credits and lower out-of-pocket costs based on your household size and income.
- If you voluntarily drop your retiree coverage, you wonât qualify for a Special Enrollment Period
A time outside the yearly Open Enrollment Period when you can sign up for health insurance. You qualify for a Special Enrollment Period if youâve had certain life events, including losing health coverage, moving, getting married, having a baby, or adopting a child, or if your household income is below a certain amount.
to enroll in a new Marketplace plan. You wonât be able to enroll in health coverage through the Marketplace until the next Open Enrollment period.
You Can Remain On Cobra For 18 Or 36 Months
The Consolidated Omnibus Budget Reconciliation Act or COBRA, is a law that gives workers and their insured dependents the right to keep their employer-sponsored health plan after that insurance would end due to job loss or changes in the immediate family for a limited period of 18 or 36 months.
The length of time depends on the type of qualifying event that made you eligible for COBRA insurance continuation coverage. The group health plan may provide longer periods of coverage beyond the maximum period required by law.
COBRA Alternative:
We are private insurance company that publishes information on the COBRA law. Additionally, we provide alternative temporary insurance option if continuation is unavailable or too expensive.
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Buy Health Insurance Privately
Your states health insurance exchange isnt the only place you can buy an individual health insurance policyindividual market health insurance plans purchased outside the exchange are still fully compliant with the ACA, as long as they’re not considered excepted benefits.
For example, you can buy a policy through a private health insurance exchange like eHealthInsurance.com. You can also buy a health insurance policy directly from a health insurance company. But you wont be able to get subsidized health insurance unless you get a plan from your states health insurance exchange.
So if there’s any chance that your income will make you eligible for a subsidy, you’ll want to buy coverage in the exchange. .
You can use an independent insurance agent to advise you and help you buy health insurance. Many, but not all, insurance agents are able to help you buy a plan listed on your states health insurance exchange, or one purchased directly from a health insurance company. Ask the broker to make sure that he or she will be able to advise you about both on- and off-exchange options, depending on your circumstances.
Whether you buy a plan privately or on your states health insurance exchange, insurance companies are no longer allowed to charge you more for major medical health insurance because you have a preexisting condition or health problem .
How To Keep Your Fehb When You Retire
In order to carry FEHB coverage into retirement, you must meet these requirements. The author also addresses some questions federal employees are likely to have.
Your FEHB coverage is an important benefit while youre working, and if you meet the eligibility rules, you and your spouse can keep the benefit for the rest of your lives in retirement. Bonus: the share of cost remains the same, too.
The ability to continue FEHB coverage into retirement gives you more flexibility in picking your retirement dateyoure not forced into waiting until your 65th birthday and Medicare eligibility or paying high rates for private health insurance.
Theres some misinformation and confusion, though, about how FEHB works in retirement. This can make it hard for you to plan a financially secure future.
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Choosing The Right Cobra Option For Retiree Coverage
Employee Benefits Corporation is here to offer assistance with COBRA and retiree coverage. We recommend that all employers review each coverage option carefully and consider the following:
- Does the employer meet the conditions described above for choosing the option?
- If the employer is unionized, does the employer need to negotiate the option with the union?
- Does the employers health plan documents need to be updated to reflect the chosen option?
- Does the option align with how the employers retiree coverage is set up with the employers insurance carrier, stop-loss carrier , TPAs, and/or COBRA administrator?
COBRA regulations are complex and Employee Benefits Corporation is here to make the process easier on employers. Our end-to-end COBRA administration provides notices within the required timeframes, collection of premium payments, and much more. To learn more about our role in the COBRA process, visit our COBRASecure page.
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Retiree Health Benefits And Cobra
Employers often incorrectly assume that they dont need to offer COBRA if they offer retiree health benefits or they misunderstand when and to whom COBRA must be offered. Unfortunately, these types of common COBRA errors can lead to significant risk of penalties and private lawsuits under COBRA.
When it comes to COBRA and retiree coverage, there are three options that employers must typically choose from: alternative coverage, concurrent coverage, and deferred COBRA coverage. Employers should review each option carefully before choosing the right coverage. Retiree coverage is complex, and employers with questions about how they should structure their retiree coverage should consult with their insurance broker and/or legal counsel.
Cobra For Surviving Dependents
1. As a covered dependent, can I continue my COBRA coverage if my insured spouse or parent dies?
2. How long can I keep COBRA coverage?
You can continue insurance coverage through COBRA for up to 36 months after you lose eligibility as a dependent, as long as you do not:
- have other group health, dental or vision insurance and
- become eligible for Medicare.
3. As a surviving dependent, can I add dependents on my COBRA coverage?
4. How much does COBRA coverage cost?
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Cobra Rules For Retirees
If youre soon to be retired and arent yet eligible for Medicare, you may be in the market for a new health insurance plan and thinking about taking a look at getting health insurance with COBRA. Due to its high costs, it wont be for everyone, but if you are going to retire and are considering getting your health insurance through COBRA, here is what you will want to know. You can also work with a financial advisor to plan your finances and retirement budget to help you pay for COBRA or help find an alternative option.
Tips For Retirement Planning
- Healthcare during retirement is one of many things you need to have a plan for. Getting your finances in order by investing in the right assets now is the best way to help you afford the right insurance and lifestyle later. A financial advisor can help you do just that by creating a plan that meets your needs. If you dont have a financial advisor, finding one doesnt have to be hard. SmartAssets free toolmatches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
- As youre planning out what health care is going to cost you as a retiree, its also a good time to make sure you have the right budget plan in place so that you can afford your chosen lifestyle. You can use SmartAssets free budget calculator to help you do just that.
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Do I Need To Sign Up For Medicare If My Former Employers Coverage Continues Under Cobra
En español | Yes, you need to sign up for Medicare Part A and Part B if youre 65 or older, even if you can continue your employers health insurance through COBRA after you leave your job. Otherwise, you could end up with late enrollment penalties and coverage gaps.
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law that requires companies with 20 or more employees to let them continue their group health insurance coverage for up to 18 months after they or their spouse leaves their job. Sometimes COBRA coverage can continue for up to 36 months for certain family members.
Your coverage wont change under COBRA, but your premiums usually jump because you have to pay both the employers and the employees share of the costs. Employers generally pay 70 percent to 80 percent of the premiums for their current employees.
Medicare works differently with COBRA, depending on whether you first signed up for COBRA before or after age 65.
Retiring Early Heres What You Need To Know About Cobra
- Insight Articles
- Retiring Early? Heres What You Need To Know About COBRA
Any plan for bridging the gap between an early retirement and becoming eligible for Medicare at age 65 needs to include a discussion about COBRA health benefits. Legislators in Washington D.C. love a catchy acronym, and COBRA definitely fits the mold. Like the reptile COBRA is named after, failing to plan for healthcare expenses before Medicare coverage kicks in can sneak up and bite you when you least expect it. The struggle to find affordable and comprehensive health insurance prior to qualifying for Medicare can be difficult, and in certain situations, COBRA continuation coverage might be part of your best solution.
What Is COBRA?
When members of the Ways and Means Committee in the House of Representatives became concerned with reports of the growing number of Americans without health insurance coverage, they began to debate the COBRA Act, a way for employees to extend their health benefits in certain situations. COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, was ultimately signed into law by President Ronald Reagan in 1985.
Do I Qualify for COBRA?
To qualify for continuation of coverage under COBRA you must meet three elements:
- your employers group health plan must be considered covered by COBRA
- a qualifying event must occur
- you must be a qualified beneficiary
What Is Covered and How Long Does It Last?
How Much Does It Cost?
How To Offset Some of The Cost
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Option : Buy A Health Insurance Plan Through Pennie
Pennie is the marketplace that provides people living in Pennsylvania with access to health insurance and financial assistance, if needed.
If your spouse has begun their Medicare coverage and your COBRA coverage has ended, you may be eligible for individual coverage through Pennie, says Kolb.
Want to learn more about Pennie? Visit pennie.com or call .
And if you want to directly contact a health plan provider, like Geisinger Health Plan, they can also help you find the best plan for your needs.
Cobra Vs Medicare Advantage
The cost of Medicare Advantage plans varies depending on the plan you choose and your location. Not all plans are available in all states. You can generally find Medicare Advantage plans that cover services original Medicare doesnt. Your costs compared to a COBRA plan will depend on the details of the COBRA plans and Advantage plans available to you.
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How Does Medicare Work With Cobra After Age 65
If you leave your job after you turn 65, you arent prohibited from signing up for COBRA, but you could end up with late enrollment penalties and coverage gaps if you dont sign up for Medicare when you leave your job.
You can delay signing up for Medicare only if you or your spouse is still working and you have health insurance from a current employer. Even though COBRA is the same coverage as you had when working, it acts differently under Medicare rules because you or your spouse are no longer actively working in that job.
If you postponed signing up for Medicare past 65 because you or your spouse was still working, you qualify for a special enrollment period to sign up for Medicare any time while working in that job and for up to eight months after you lose that coverage or the employment ends, whichever comes first. You should enroll in Medicare Part A and Part B before the end of that special enrollment period.
If you dont, you may have to pay a Part B late-enrollment penalty. And if you or your spouse has not earned at least 40 credits through paying Medicare payroll taxes at work, you also may face a Part A late-enrollment penalty if you delay beyond any special enrollment period you might qualify for.
Primary vs. secondary coverage. At 65, whether youve enrolled in Medicare or not, COBRA switches from being the first in line to pay your medical bills to becoming secondary coverage, potentially leaving you with no primary coverage.
Keep in mind
Does Medicare Affect Cobra Coverage
Employees are eligible for premium-free Part A if they are age 65 or older and they or their spouse has worked and paid Medicare taxes for at least 10 years. Covered employees are entitled to Medicare when they are both eligible and enrolled in the Medicare program. Medicare entitlement which can be a COBRA triggering event rarely causes a loss of plan coverage for active employees, because Medicare Secondary Payer provisions of the Social Security Act prohibit terminating group health plans for employees entitled to Medicare . So it is rarely a COBRA qualifying event for active employees.
But, Medicare statutory rules allow employer-sponsored group health plans to reduce or terminate coverage if retired employees become entitled to Medicare due to age. If employers take such action and it leads to a loss of coverage for retirees spouses or dependents under the terms of the employers retiree coverage, then Medicare entitlement constitutes a triggering event for the qualifying beneficiaries.
In this scenario, COBRA requires employers to offer the affected spouses and children to elect up to 36 months of COBRA coverage from the date of Medicare entitlement.
Would you know what to do if you received word an employee had just passed away? Not only is it a COBRA qualifying event, but payroll must be processed a certain way. Find out more in this blog post.
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