Arizona COBRA and Medicare

COBRA coverage is guaranteed issue so long as the applicant submits the completed application within 60 days of losing employer group health insurance coverage (or during an open enrollment period.)

Whether to choose COBRA coverage or an individual ACA plan on the Marketplace (healthcare.gov) comes down to money and benefits offered. If an individual qualifies for a substantial premium subsidy through the Marketplace, it likely makes sense to go that route. The Marketplace coverage may possibly be not as good as the COBRA coverage, but the employer COBRA coverage may cost substantially more. The individual Marketplace plan is permanent insurance, the COBRA coverage is temporary and usually lasts 18 months.

Problems arise for those about to be 65, and those older than 65, when an employer subsidizes COBRA premiums as part of a severance package. COBRA rules state that COBRA coverage is to end at 65. If you already have Medicare Parts A and B, get laid off and are offered subsidized COBRA coverage, know that COBRA is secondary coverage to Medicare A and B, it is never primary. If the COBRA coverage is not subsidized don’t take it, it makes no financial sense. In other words, if it’s free take it, otherwise don’t.

If you only have Medicare Part A coverage when laid off/quit/fired immediately enroll in Medicare Part B, forget COBRA, don’t enroll. You only have 60 days to do so. If you fail to enroll in Part B within 60 days of the end of group coverage you will face a LIFETIME premium penalty when you finally can enroll in Medicare Part B (you will likely have to wait for open enrollment season if you miss your 60-day open enrollment window.) Once enrolled in Part B buy a Medicare supplement plan.

The vast majority of individuals will qualify for a premium subsidy for individual Marketplace ACA plans. This being the case it will be tough to justify paying for temporary COBRA coverage in most cases. That said, due diligence is the rule, and carefully comparing coverage options before making a final decision is very important. Better yet, call a licensed Arizona health insurance broker (602-405-8769) and Mike will be happy to assist, no charge.