- Spousal only COBRA is a winning choice.
- Beware of COBRA if you are Medicare eligible.
Note: Always consult with your company’s human resources department to confirm your options.
A spousal only COBRA option is available for up to 36 months if the retired employee is eligible for Medicare.
An employee will be retiring January 1, 2020. He is 66 years old. His wife will not be eligible for Medicare until October 2020. Should they both go on COBRA for nine months or should he go on Medicare and his wife take an individual insurance policy?
There may be a third and better choice. He goes on Medicare and his wife goes on COBRA until she turns 65. If you are in this situation, check with your human resources department about spousal only COBRA. Apparently, they may have to look up the answer. Surprisingly few people ask.
While the spouse in our example only needs coverage for 9 months, spousal only COBRA is available for up to 36 months in certain circumstances. (Covered family members are also included.)
The wife is better off staying on the employer plan which, in her case, is less expensive and superior to individual insurance. More importantly, the husband maintains his Special Election Period open enrollment rights with Medicare and a Supplement. Those rights would have been lost had he stayed on COBRA for nine months.
Stay on COBRA too long and you lose your Medicare open enrollment/guarantee issue rights.
Medicare eligible individuals can stay on an employer plan and retain the right to enroll in Medicare in the future without paying a late enrollment penalty or having to wait until the general enrollment period. But, only keep this right when you are actively employed.
Going on COBRA means you are no longer employed so you forfeit your special Medicare enrollment rights if you are over age 65 1/2. You have eight months from termination of active employee coverage to enroll in Medicare penalty free. Don’t choose COBRA for longer than that.
At risk: Special rights to a Guaranteed Issue Medicare Supplement Plan.
In most states, individuals have the right to purchase a Medicare Supplement plan without being denied or given a preexisting conditions clause when they leave employer insurance. However, you lose that right if you do not enroll in Medicare and in a Supplement plan, within timeframes specified by the law which can vary by state.
At Center for Long Term Care Planning in Boca Raton our goal is to educate you about all your Medicare insurance options. We pride ourselves in guiding you in your Medicare insurance planning. If you are turning 65, over 65 and looking towards retirement, are on disability, or simply want to enquire about changing your plan, give us a call at 561-272-0720.