Do I need to sign up for Medicare if my former employer’s coverage continues under COBRA?

En español | Yes, you need to sign up for Medicare Part A and Part B if you’re 65 or older, even if you can continue your employer’s 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. (Many states have similar laws for smaller employers.) Sometimes COBRA coverage can continue for up to 36 months for certain family members.

Your coverage won’t change under COBRA, but your premiums usually jump because you have to pay both the employer’s and the employee’s 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.

What happens if my COBRA coverage started before 65?

If you become eligible for Medicare after you’ve signed up for COBRA, your COBRA benefits cease at age 65, no matter how many months of COBRA coverage you were offered. You’ll need to sign up for Medicare during your initial enrollment period, which begins three months before the month you turn 65 and ends three months after your birthday month.

Medicare won’t inform you that you need to sign up because your COBRA coverage ceased. You’ll learn only after you try to use your private insurance and your claim is rejected.

How does Medicare work with COBRA after age 65?

If you leave your job after you turn 65, you aren’t prohibited from signing up for COBRA, but you could end up with late enrollment penalties and coverage gaps if you don’t 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 don’t, 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.

You’ll also have to wait until the next general enrollment period, which runs from Jan. 1 to March 31, to sign up for Medicare Part B. If you don’t enroll in Medicare when that employment ends, you could face big coverage gaps even before your special enrollment period is over.

Primary vs. secondary coverage. At 65, whether you’ve 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.

When you’re 65 or older and you and your spouse are no longer working, Medicare pays your health care claims first, and your other coverage — whether COBRA, a Medigap policy or retiree coverage — pays for expenses and services that Medicare doesn’t cover. The secondary coverage may pay for Medicare’s deductibles, copayments and other out-of-pocket costs.

But if you don’t sign up for Medicare, the secondary coverage may not pay any claims. It’s important to sign up for Medicare before — or soon after — the employment ends so that you don’t end up with coverage gaps.

Keep in mind

Prescription drug coverage. The rules are different for Medicare Part D prescription plans. If you have COBRA or retiree drug coverage that is at least as good as Part D, which Medicare considers “creditable coverage,” you don’t need to enroll in Part D as long as you have that coverage, even if it is not from a current employer. Ask your plan if the coverage is creditable.

After losing that coverage, you’ll have 62 days to enroll in Part D without a late-enrollment penalty.

Medigap plans. You can buy any Medigap policy in your area, regardless of your health, within six months of enrolling in Medicare Part B. Otherwise, Medigap insurers can reject you for coverage or charge more if you have preexisting conditions. Within 63 days of losing health insurance that provides secondary coverage to Medicare, such as COBRA, you have another guaranteed issue right (a.k.a. Medigap protection).

However, in most states, you must exhaust COBRA coverage (meaning that you may have to pay for the full 18 months of COBRA) before you’re given this guaranteed issue right, if more than six months have passed since you signed up for Medicare Part B. When first deciding whether to supplement Medicare with COBRA or Medigap, compare the cost of both options and keep this time frame in mind.

Updated August 17, 2022