Question: I am currently working but will be retiring as of 7-31. I will need COBRA insurance until I turn 65 in September. What advice do you have?

Answer: The Consolidated Omnibus Budget Reconciliation Act (COBRA) is insurance that allows individuals to keep the insurance product they had while working. COBRA is available to purchase for 18 months and sometimes up to 36 months. The insurance policy is the same policy as you had while working. The difference is you are paying the total insurance premium without help from your previous employer. Often individuals appreciate the COBRA policy because it is the insurance product they are used to.

COBRA is an insurance product that can be back dated, (most health insurance policies cannot do that). You said you are retiring as of July 31, and Medicare will begin 9-1. So, you will only need coverage from COBRA for August. I would suggest getting the information from COBRA, fill out the forms, but do not send them in. If you receive any medical care, or need prescriptions during August, you can evaluate the costs, is it cheaper to pay for them in full or pay the COBRA premium and have COBRA pay part of the bills. If it cost effective to have COBRA, send in the application and then pay the COBRA premium. If you didn’t need any medical care, or less than the COBRA premium, when 9-1 comes around you have Medicare and no more need for COBRA.

Original Medicare Part A & B is insurance that is available to those 65 or older and those younger than 65 on Social Security Disability.

Those who are eligible for Medicare sometimes want to hold off enrolling due to other insurance product options they have available to them. This is ONLY advisable if you have insurance provided by a current employer. COBRA by definition means you are no longer working. COBRA and Medicare are rarely useful at the same time.

You may be on COBRA after your employment ends, but once you are eligible for Medicare, you should enroll in Medicare A & B. For you, enrollment in Medicare would mean that you drop the COBRA. There are many cost effective insurance products for you to use with your Medicare that will cost less than your COBRA.

I occasionally run into someone who delays getting into Medicare because they have COBRA. This is a serious mistake. If you miss your Initial Enrollment Period (IEP) or the Special Enrollment Period (SEP) because you left work, you can’t enroll into Medicare A & B anytime you want. When you do join with this delay in coverage, there is a premium penalty of 10% for each 12 months you were eligible to enroll and did not. This premium penalty is a penalty you pay each month for the rest of your life. Another concern is that when COBRA catches up with the fact that you should have enrolled in Medicare, they may NOT pay your full claims because they should have been secondary to Medicare. In this situation, COBRA will not pay more than 20% of any claim because Medicare would have paid the first 80% if you had been enrolled.

A related question is what about Medicare Part D, which is Prescription Drug Coverage. If you have Medicare A or B, you must have Prescription Drug Coverage. The coverage could be a Medicare Part D provider, an employee plan, a retiree plan, COBRA or the Veterans Administration.

If you have COBRA and are close to the opportunity to enroll in Medicare please do NOT put off enrolling in Medicare. Research your options for Medicare coverage. You could enroll in Medicare Part A & B and KEEP your COBRA coverage. This is probably NOT the most cost effective coverage for most individuals.

Health Care Reform and the Marketplace, means that all individuals are eligible to get Health Insurance no matter what their age or situation. Please be sure to review all options (like the Affordable Care Act) for insurance before you decide to keep your COBRA policy. You don’t necessarily need to be paying those really high COBRA premiums if there are other options available to you. To talk with someone about the Affordable Care Act plans I recommend seeking a Certified Navigator, or insurance broker.

Janell Sluga is a Geriatric Care Manager helping seniors in our community access services and insurance. To reach her, please email editorial@post-journal.com.