COBRA Coverage with Medicare
COBRA coverage with Medicare can be confusing. You lose your job or retire, you’re offered COBRA to continue your employer’s health plan, and then you turn 65 and become eligible for Medicare. What do you do? Do you keep COBRA? Do you enroll in Medicare? Can you have both?
Here’s the truth: most people don’t understand how COBRA and Medicare work together. They assume COBRA lets them delay Medicare without penalties. It doesn’t.
They assume COBRA is cheaper than Medicare. It’s usually not.
And they assume they can just figure it out when the time comes. But by then, they’ve already made costly mistakes — penalties they’ll pay for the rest of their lives, denied claims, and thousands in unnecessary premiums.
I treat every client like I would my own parents. And if my parents were dealing with COBRA coverage with Medicare, here’s exactly what I’d walk them through — when to enroll, how to coordinate benefits, and how to avoid expensive mistakes.
Understanding COBRA Coverage and Costs
Let’s start with what COBRA actually is.
COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you keep your former employer’s health plan after you leave your job. It’s continuation coverage — same plan, same doctors, same benefits.
But here’s the catch: you pay the full premium.
When you were employed, your employer probably paid 70% to 80% of your health insurance premium. You paid the rest. With COBRA, you pay 100% of the premium plus a 2% administrative fee — a total of 102% of the plan’s cost.
That can be expensive. Really expensive.
COBRA premiums often run $600 to $1,200 per month for an individual, and $1,500 to $2,500 per month for a family. And that’s just the premium — you’re still responsible for deductibles, copays, and coinsurance.
COBRA typically lasts 18 months. In some cases, it can be extended to 36 months for spouses and dependents.
So COBRA gives you continuity. You keep your doctors. You keep your plan. But you’re paying a premium price for it.
And here’s the most important thing to understand: COBRA is not creditable coverage for delaying Medicare.
Turning 65: Why Medicare Enrollment Can’t Wait
Here’s where most people get COBRA and Medicare coordination wrong.
They think COBRA lets them delay enrolling in Medicare without penalties. It doesn’t.
Once you turn 65, Medicare is supposed to become your primary insurance. If you don’t enroll in Medicare and you’re relying on COBRA, you’re making a mistake that can cost you thousands.
Here’s what happens if you don’t enroll in Medicare at 65:
1. COBRA stops paying as primary. Once you’re eligible for Medicare, COBRA automatically becomes secondary — whether you enroll in Medicare or not. That means COBRA won’t pay claims the way it used to. You could be stuck with huge bills.
2. You’ll face late enrollment penalties. If you don’t enroll in Medicare Part B during your Initial Enrollment Period (the seven-month window around your 65th birthday), you’ll pay a 10% penalty on your Part B premium for every 12 months you were late. That penalty lasts for life.
3. You’ll face Part D penalties too. If you don’t enroll in Medicare Part D for prescription drug coverage, you’ll pay a 1% penalty for every month you were late. That penalty also lasts for life.
4. You could face denied claims. If you don’t have Medicare as your primary insurance, COBRA may deny claims or pay only a fraction of what they would have paid. You’re left holding the bill.
I’ve seen people rack up tens of thousands of dollars in medical bills because they thought COBRA would cover them. It didn’t.
The rule is simple: enroll in Medicare at 65, even if you have COBRA.
Learn more about COBRA and Medicare: The 8-Month Rule Explained.
Coordinating COBRA Coverage with Medicare as Secondary
So you’re 65, you’ve enrolled in Medicare Parts A and B, and you still have COBRA. Can you keep both?
Yes. And in some cases, it makes sense.
When you have both Medicare and COBRA, Medicare pays first (primary), and COBRA pays second (secondary). COBRA can help cover things Medicare doesn’t fully pay — deductibles, coinsurance, and certain services.
But here’s what you need to do to coordinate benefits properly:
1. Enroll in Medicare Parts A and B on time. Don’t delay. Enroll during your Initial Enrollment Period — three months before your 65th birthday, your birthday month, and three months after. If you enroll early (three months before), your Medicare coverage starts the month you turn 65.
2. Give both plans your Medicare information. Once you’re enrolled in Medicare, notify your COBRA administrator. Give them your Medicare number and your coverage start dates. This ensures claims are processed correctly.
3. Confirm COBRA coordinates benefits with Medicare. Not all plans coordinate the same way. Ask your COBRA administrator how the plan works as secondary coverage. Verify which services are covered and how claims are processed.
4. Verify networks and prior authorization rules. Some COBRA plans have network restrictions or require prior authorization for certain services. Make sure you understand the rules so you don’t get stuck with denied claims.
5. Track start dates precisely. Medicare must start before or at the same time as your COBRA coverage. If there’s a gap, you could face coverage issues and penalties.
Here’s the bottom line: keeping COBRA as secondary to Medicare can work if you need extra coverage for a few months while you transition. But it’s expensive, and for most people, there are better options.
Special Enrollment Periods for Those Working Past 65
What if you’re still working at 65 and you have employer group coverage — not COBRA?
That’s different.
If you’re actively employed at a company with 20 or more employees, you can delay Medicare Part B and Part D without penalties as long as your coverage is creditable.
But once you retire or your employer coverage ends, you need to act fast.
You have an eight-month Special Enrollment Period after your employment or group coverage ends to enroll in Medicare without penalties.
Here’s what you need to do:
1. Enroll in Medicare Parts A and B. Use Form CMS-40B (Medicare enrollment) and Form CMS-L564 (employer coverage verification). Your HR department needs to complete the L564 form to confirm your coverage dates.
2. Don’t rely on COBRA as primary coverage. Once you’re eligible for Medicare, COBRA doesn’t count as creditable coverage. Medicare should pay first.
3. Time your Part B start date carefully. Make sure your Part B coverage starts the month after your employer coverage ends. That way, there’s no gap.
4. Submit forms promptly. Don’t wait until the last minute. Submit your Medicare application at least two months before your employer coverage ends to ensure a seamless transition.
For more details, read Do You Need Medicare If You’re Still Working? and Medicare vs. Employer Insurance Explained.
Your Medigap Open Enrollment Window and Plan Choices
Once your Medicare Part B starts, you have a six-month window to enroll in a Medigap plan without medical underwriting.
This is your Medigap Open Enrollment Period, and it’s one of the most important windows in Medicare. Miss it, and you could be stuck paying higher premiums or even denied coverage based on your health.
During this six-month window, insurance companies can’t:
- Deny you coverage
- Charge you more based on your health
- Make you wait for coverage to start (no pre-existing condition exclusions)
After the window closes, all bets are off. Insurers can require medical underwriting. They can deny you. They can charge you more. And if you have health issues, you might not be able to get a Medigap plan at all.
Here’s what to do during your Medigap Open Enrollment Period:
1. Compare Plan G vs. Plan N. These are the two most popular Medigap plans. Plan G covers almost everything except the Part B deductible. Plan N has lower premiums but includes small copays for doctor visits and ER visits.
2. Shop around for premiums. Medigap premiums vary by insurance company, even for the same plan. Get quotes from multiple carriers and compare.
3. Check for household discounts. Some insurers offer discounts if you and your spouse both enroll.
4. Confirm your doctors accept Medicare. Medigap works with Original Medicare, so you can see any doctor who accepts Medicare — no networks, no referrals.
5. Apply before your window closes. Don’t wait until the last minute. Mark your Part B effective date on your calendar and apply for Medigap within the first few months.
For more on Medigap plans, read Best Medigap Plans for 2026.
Avoiding Pitfalls With Medicare Advantage and Future Options
Some people choose Medicare Advantage instead of Medigap when they transition off COBRA. And that can work — Medicare Advantage plans often have lower premiums and include extra benefits like dental and vision.
But here’s the problem: if you start with Medicare Advantage and later want to switch to Medigap, you’ll likely face medical underwriting.
Your six-month Medigap Open Enrollment Period starts when your Part B begins. If you choose Medicare Advantage instead of Medigap during that window, you’re using up your guaranteed-issue rights.
Later, if you want to switch to Medigap, insurers can:
- Require medical underwriting
- Deny you coverage
- Charge you higher premiums based on your health
There are a few exceptions — situations where you get guaranteed-issue rights to buy Medigap after your initial window. But those are limited. For most people, if you miss your six-month window, it’s gone.
So if you’re considering Medicare Advantage, think long-term:
- Are you comfortable with network restrictions?
- Do you travel frequently or split time between states?
- Do you want the flexibility to see any doctor without referrals?
If the answer to any of those is no, Medigap might be the better choice — even if it costs more upfront.
For a detailed comparison, read Medicare Advantage vs. Medigap: Which Saves You More? and Original Medicare vs. Medicare Advantage: What’s the Difference.
Frequently Asked Questions
How do COBRA rules differ for small employers under 20 employees?
Employers with fewer than 20 employees generally follow state “mini-COBRA” laws, not federal COBRA. You’ll get shorter continuation periods, varying eligibility rules, and different notice requirements. Verify your state’s mini-COBRA rules, premium caps, and how Medicare coordinates to avoid coverage gaps.
Does COBRA dental or vision affect Medicare enrollment decisions?
No. COBRA dental and vision coverage doesn’t count as creditable medical coverage for Medicare purposes. You should still enroll in Medicare Parts A and B on time to avoid penalties. You can keep COBRA dental and vision separately if it’s useful, but don’t delay Medicare because of it.
Can Health Savings Account contributions continue while on COBRA before Medicare?
Yes. While on COBRA with HSA-eligible high-deductible coverage, you can keep contributing to your HSA. But once any part of Medicare starts, you must stop contributions. Confirm your plan is HSA-eligible, stop contributions before your Medicare effective date, and avoid tax penalties.
How do TRICARE or VA benefits coordinate with COBRA and Medicare?
TRICARE and VA don’t coordinate with COBRA. You can keep COBRA separately if you choose. At 65, enroll in Medicare. TRICARE becomes TRICARE For Life and pays secondary to Medicare. VA care remains separate. Medicare helps cover non-VA care and avoids penalties.
What happens to COBRA coverage for dependents when I enroll in Medicare?
Your COBRA coverage may end when you enroll in Medicare, but your dependents’ COBRA usually continues for the remainder of their eligibility period. You switch to Medicare; they stay on COBRA and pay full premiums. They can extend COBRA under certain qualifying events like divorce or loss of dependent status.
The Bottom Line: Don’t Let COBRA Delay Your Medicare Enrollment
Here’s what you need to remember about COBRA coverage with Medicare:
COBRA is expensive. It’s temporary. And it doesn’t let you delay Medicare without penalties.
At 65, enroll in Medicare Parts A and B during your Initial Enrollment Period. Don’t wait. Don’t assume COBRA has you covered. It doesn’t — not the way you think.
If you keep COBRA after enrolling in Medicare, it can work as secondary coverage for a short time. But for most people, adding a Medigap plan or choosing Medicare Advantage is a better long-term solution.
And whatever you do, don’t miss your six-month Medigap Open Enrollment Period. It’s your one guaranteed chance to get Medigap coverage without medical underwriting.
Plan ahead. Enroll on time. And don’t let COBRA mistakes cost you thousands in penalties and denied claims.
Need Help Coordinating COBRA and Medicare?
If you’re dealing with COBRA and you’re not sure when to enroll in Medicare or what plan to choose, let’s talk.
We’ll walk through your situation, answer your questions, and help you avoid costly mistakes — without the confusion or pressure.
You can also scan the QR code to fill out your medications, doctors, and pharmacy information ahead of time. That way, we can waive the 48-hour rule and get you answers faster.
Next step is simple: Book your free consultation, or reach out with questions. We’re here to help.
