Medicare Eligible Beware: COBRA Is Dangerous When Electing Part B

Caution

Advocates have seen an increase in the number of Medicare beneficiaries who have delayed enrolling in Medicare Part B, thinking, erroneously, that because they are paying for and receiving continued health coverage under COBRA, they do not have to enroll in Medicare Part B. COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period (SEP) to enroll in Part B after their COBRA coverage ends. (They may, however, qualify for a SEP to enroll in Part D at that time if the drug coverage they had under COBRA constitutes creditable coverage.) Only individuals who delay enrolling in Part B because they are covered under an employee group health plan (EGHP) by reason of "current" employment may take advantage of the SEP rules. Individuals on COBRA do not meet the definition of having current employment status.

Consequences

Medicare Part B – The consequences of delayed Part B enrollment can be severe.  Generally, the beneficiary who does not enroll during his or her initial enrollment period and who is not entitled to a SEP must wait to enroll in the next general enrollment period (January – March), with benefits starting on July 1 of that year. Further, there is a 10% late enrollment penalty added to the standard monthly premium for every 12 months of delayed enrollment in Part B. The penalty has no durational limit.

Under Part D, the penalty is 1% of the national base beneficiary premium in a given year times the number of full, uncovered months of eligibility without other creditable drug coverage. A Part D eligible individual must pay the late penalty if there is a continuous period of 63 days or longer at any time after the end of the individual's initial enrollment period during which the individual meets all of the following conditions: (1) The individual was eligible to enroll in a Part D plan; (2) The individual was not covered under any creditable prescription drug coverage; and (3) The individual was not enrolled in a Part D plan.

from Center of Medicare Advocacy

MEDICARE PART B AND WHEN TO ELECT

Turning 65 and being eligible to elect Medicare coverage can be a tricky time.  If you have medical coverage through your employer, you may want to delay the election of your Medicare Part B coverage as this costs money.  Medicare Part A is free.  In certain circumstances you will not want to wait to elect Part B.  When you employer has over 20 employees, Medicare is secondary, meaning it pays after your employer coverage. However, if there are less than 20 employees, Medicare is primary.  Why this is important is that if you wait to elect Part B because you have coverage through your employer, it may come back against you.  Part A covers Hospitalization and Part B covers the Physicians. Since Medicare is primary, all claims will go there first and then to the employer based plan. If you don't have Part B, those claims can't go to Medicare and will not be sent to the carrier, they will stop. Effectively you will have no coverage for anything that would have been paid through Part B, namely any physician fees. Therefore, if your employer has less than 20 employees and you or your employee is eligible to elect Part B, elect it.  You have three months prior to your effective date, the month of you effective date and three months after to sign up for Part B. 

For more information you can call Social Security at 1-800-772-1213 or go to the Social Security website .