What to know about COBRA and Medicare
COBRA is a law that allows people to keep their employer-provided health insurance if they quit their job. It can sometimes be used in conjunction with Medicare.
COBRA continuing coverage assists people who have lost their employer-sponsored health insurance, whereas Medicare plans often cover persons over the age of 65. COBRA and Medicare may be able to function together in some cases.
We’ll go over what COBRA is, who is qualified, how it works with Medicare and other crucial rules to keep in mind in this post.
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What is Medicare?
If a person has Medicare before becoming eligible for COBRA, COBRA can be used in combination with it.
Medicare is a government healthcare program that covers:
- people above the age of 65 and those under the age of 65 with end-stage renal disease
- people with amyotrophic lateral sclerosis (commonly known as Lou Gehrig’s disease) who are younger than 65 years old
Original Medicare
Part A and Part B are the two portions of original Medicare.
The cost of qualifying medical services received during a hospital stay is covered by Medicare Part A.
Part B of Medicare pays for qualified medical expenses such as doctor’s appointments, restricted prescription medication, and other outpatient services.
Medicare Advantage
The benefits of Parts A and B are combined in Medicare Advantage (commonly known as Medicare Part C). It usually also contains Part D, which covers a broader range of prescription medications.
Medicare Advantage plans are offered and fulfilled by private insurance firms that have cost-sharing arrangements with Medicare.
Medicare Advantage plans may include extra coverage for services such as vision and dentistry. Costs may vary, and a person may want to use Medicare’s comparison tool to compare the various possibilities.
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) was signed into law in 1986. It’s sometimes referred to as “continuation coverage.”
COBRA allows employees to keep their employer-provided health insurance for a limited time after their employment expires.
COBRA coverage is normally only available if an employer’s group health plan has 20 or more employees.
Who is eligible?
An employee’s health insurance coverage may be terminated for a variety of reasons, but to be eligible for COBRA continuing coverage, a person must meet certain conditions.
COBRA established rules, referred to as qualifying events. When a qualifying event occurs, a person may be eligible for COBRA benefits.
The following are examples of qualifying events:
Qualifying events for the covered employee’s spouse or dependent child when a person is fired (save for egregious misbehavior) when an employer reduces a person’s working hours
when a person is legally divorced or separated from a covered employee when the covered employee becomes Medicare-eligible, or when the covered employee dies
A person must also be a qualified beneficiary, which means that on the day before a qualifying occurrence, they must be employed and insured by their group insurance plan.
A family member, such as a spouse, a previous spouse, or a dependent child, can also be a beneficiary.
Who pays for COBRA?
When a person is employed, the premium is split between the employer and the employee. When a person loses their job, they are responsible for all COBRA premiums.
Under COBRA, the insurance company providing the plan may charge up to 102 percent of the cost paid by individuals still enrolled in the same plan, implying that a person may pay 2% more than the total cost of the plan.
A qualifying event must be reported to the group insurance carrier within 30 days.
The insurance company will then have 14 days to give the employee and their spouse or dependents an election notification.
After that, a person has 60 days to decide whether or not to enroll in COBRA. The 60-day term begins on the date of the qualifying event or, if later, the date of the election notification.
Any eligible beneficiary has the option to choose and get COBRA continuation coverage on their own.
Medicare and COBRA together
Depending on which policy a person gets first, Medicare and COBRA may be able to work together.
How do COBRA and Medicare work together?
The compensation to healthcare professionals is divided into two sorts if you have more than one type of insurance coverage: primary and secondary. This is determined by which insurance is paid first and which is paid second.
Medicare is your major payer if you have Medicare and COBRA benefits. This means that Medicare will cover the cost of services first, with your COBRA plan covering the rest.
When you use Medicare Part B, for example, you typically pay a coinsurance of 20% of the Medicare-approved treatment cost. If your COBRA plan has a lower coinsurance or deductible, you can utilize it to cover the last 20%.
CORBA plans may also cover treatments not covered by Medicare Parts A and B, such as dental, eye, and prescription care. Separate Medicare Advantage (Part C) or Medicare Part D plans may cover these additional costs.
Medicare before COBRA
Employees who already have original Medicare and have a qualifying incident while working are eligible for COBRA.
Medicare would take over as the primary insurer, and all medical claims would be directed to them first.
COBRA would take over as the secondary insurer, and any costs not covered by Medicare would be assessed by the COBRA insurance company.
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COBRA before Medicare
If a person gets COBRA continuation coverage before becoming Medicare-eligible, they will no longer be allowed to keep it.
When Medicare kicks in, COBRA coverage will stop. It’s vital to keep in mind that delaying Medicare enrollment could result in a penalty payment.
COBRA insurance may allow a person to preserve coverage that Medicare does not provide in specific instances. Some COBRA plans, for example, offer dental services that are not covered by Medicare. The insurance company may agree to let a client drop medical coverage but preserve dental coverage.
What options are available?
COBRA insurance can be expensive, so a person should weigh all possibilities before opting for continuation coverage.
A family member’s employer, the Health Insurance Marketplace, or Medicaid may offer more affordable options.
In the Marketplace, a person may also be eligible for Special Enrollment. 60 days before or after you lose your insurance, you can enroll in Special Enrollment.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) was passed by Congress in 1996.
HIPAA protects benefits when acquiring individual health insurance if a person meets HIPAA eligibility standards after COBRA continuing coverage has been expired.
HIPAA helps preserve benefits when a person purchases individual health insurance after COBRA continuing coverage is no longer available. Individuals with preexisting conditions may be less likely to face extra charges or exclusions imposed by some private insurance firms.
Important rules and exceptions
COBRA continuation coverage is usually available for 18 months. The number of months of eligibility is determined by when a person becomes eligible for Medicare.
COBRA can prolong an employee’s spouse and dependent children’s coverage for up to 36 months if they become eligible for Medicare up to 18 months before a qualifying event.
For example, if a qualifying event occurs six months after a person becomes eligible for Medicare, their spouse and children may be eligible for 30 months of COBRA continuation coverage. This is the 36-month period of eligibility, minus the 6-month period before the qualifying event.
If a second qualifying incident occurs, a person may be eligible for an 18-month COBRA extension.
Understanding the criteria and exceptions for COBRA continuation coverage and Medicare may assist people in determining which choice is best for them.
Summary
Following a qualifying incident, COBRA continuing coverage is health insurance. A loss of a job or a reduction in hours is an example of a qualifying occurrence.
An individual must pay for the entire cost of COBRA coverage. Insurance firms are allowed to charge an additional 2% of the original rate to an individual.
When a person already has Medicare and has a qualifying incident, COBRA and Medicare will function together.
The primary insurer will be Medicare, and the secondary insurer will be COBRA continuation coverage.
If a person gets COBRA coverage first, it will expire on the first day of Medicare coverage.
COBRA normally lasts 18 months, although it can be extended up to 36 months in rare cases.
Can you have COBRA and Medicare at the same time?
If you were already enrolled in Medicare when you became eligible for COBRA, you can have both plans. For example, if you’re 67 years old and have a combination of Medicare and employer-provided coverage, but subsequently retire or reduce your work hours to part-time, you may be eligible for both COBRA and Medicare.
If you become eligible for Medicare while participating in COBRA, however, your COBRA coverage will expire. So, if you quit your job and enroll in COBRA at the age of 64, your COBRA coverage will end when you turn 65 and enroll
