If You Go on Medicare, Can Your Spouse Go on COBRA?

One of the biggest concerns for clients as they approach retirement age is their healthcare coverage.  This stands especially true for clients that plan to retire before age 65 as Medicare has not started.  Throughout this blog I will explain the relationship between Medicare and COBRA, and how you should navigate this complex area. 

Key Takeaways:

·       Medicare Overview

·       COBRA Overview

·       Can I Be Covered by Medicare and COBRA at the Same Time?

·       Can I Be on Medicare and My Spouse on COBRA?

Medicare Overview

I want to start this blog with an overview of the two main subjects of this blog, Medicare and COBRA.  Medicare is the Federal Health Insurance Program for people 65 and older.  However, if you continue to work past age 65 and have health insurance through your employer, then you choose which coverage you want to have.  Where for most people that comes down to the premium and coverage associated.

Medicare is split into different parts, such as Part A, Part B, and Part D.  Medicare Part A covers hospital insurance such as stays at nursing facilities, hospice, and home health care.  Part B covers Medical Insurance such as doctor’s visits, outpatient care, and preventative services.  Part D covers Prescription Drug coverage which will assist in the cost of prescription drugs.  The premium for Part B and D is not the same for everyone, instead it’s based on tax brackets.  To learn more about the different Medicare rates applied to each tax bracket, check out my recent blog, “The 2023 Income Related Monthly Adjustment Amount.” 

COBRA Overview

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.  It is a federal law that provides individuals who experienced specific life events to continue to receive coverage from their employer’s health plan.  This does not last forever, but it was designed to help individuals inflicted by these events an opportunity to have health insurance until they can figure out an alternative.  The individual will have to pay out of pocket for the group health coverage, again which the individual was covered by while employed.  Note, COBRA is not automatic which means you do have to apply for it. 

If you are interested in learning more about COBRA, then follow the link!

Can I be Covered by Medicare and COBRA at the Same Time?

There are several complexities that you must consider when determining which health insurance option(s) you are eligible for.  The focus is which insurance you have first.  Typically, if you already have COBRA, then you will lose it when you enroll in Medicare.  To contrast, you can be eligible for COBRA if you are already enrolled in Medicare.  Below I will cover some things that you should do depending on which insurance you got first. 

If you are covered by COBRA and plan to enroll in Medicare, then here are a few steps you should follow.  First, you should enroll in Medicare Part B.  You will not be given an opportunity to enroll after the deadline, so it’s important that you do that.  Enrolling in Part B will not have an impact on your COBRA insurance for up to 3 years, whether you enrolled in Part B. 

If you are already enrolled in Medicare, then you are still allowed to enroll in COBRA.  In this case, Medicare would be your primary insurance while COBRA would act as your secondary insurance.  You need to make sure you stay on Medicare as it covers most of your health care costs.  There are only certain situations where the COBRA insurance will be used, and it’s expensive to have it so objectively, if you had to pick one then Medicare is the best option. 

Can I be on Medicare and My Spouse on COBRA?

Now as mentioned above, your COBRA coverage will end the day you start Medicare.  Which means that you (the individua) will no longer be covered by COBRA.  However, your spouse and children will be covered for up to 36 months after your COBRA coverage has ended regardless of whether you enrolled in Medicare during that time.  Therefore, your children and wife will not be left without coverage when your COBRA ends. 

There are circumstances that would allow you to keep parts of your COBRA coverage after you enrolled in Medicare.  For example, if your dental insurance through COBRA covered something that Medicare doesn’t, then you may be able to keep that piece of coverage.  This would consist of the individual paying the premium strictly for the part of COBRA coverage (Dental in this case), so the health insurance premium would be subtracted.  If you are interested in keeping a portion of your COBRA coverage, then I would suggest you reach out to the plan administrator for more information. 

This concludes this week’s blog about the interaction between Medicare and COBRA coverage. To reiterate, your spouse (and children) will continue to be covered by COBRA for up to 36 months after your COBRA coverage has ended (and Medicare begins).  I urge anyone else with a listener/reader question to submit it on retirewithryan.com. 

If you need help with Insurance, Investment, or overall Retirement Planning then I would highly recommend scheduling a free consultation.  During this call, we can discuss what you are looking for and if my expertise is a good fit for those needs.  You can follow the link to my calendar where you can schedule the call at your convenience.