COBRA Can Complicate Medicare Enrollment

Retirement Planning

COBRA Can Complicate Medicare Enrollment

Posted by COTO Insurance & Financial Services
6 years ago | October 21, 2018

Even as a retirement planning specialist, I learn new things about topics like Social Security and Medicare all the time! Recently some clients came to me with a dilemma regarding Medicare enrollment, and I did a little sleuthing to help them figure out their situation. Since this appears to be a mistake sometimes made by retirees, I decided it would be a good idea to warn others who might face the same situation one day. As we all know, gaining knowledge and anticipating potential problems is always better than fixing them after the fact!

Let’s say you’re taking the necessary steps toward retirement, before you turn 65, and you face the usual decisions regarding healthcare. You won’t be eligible for Medicare until you turn 65, so what do you do if you retire or otherwise lose health insurance coverage before that age?

For many, especially those who aren’t far from their 65th birthdays, the obvious solution might be a COBRA plan. This healthcare plan will allow you to extend benefits after you’ve lost health insurance coverage, for a limited period of time.

Now, let’s say that you have eighteen months of COBRA coverage, but you’re turning 65 in twelve months. You might assume that you can, or should, wait until COBRA expires before applying for Medicare. That seems logical, except it’s precisely what you should not do!

Here’s why: Your initial enrollment period for Medicare begins three months before you turn 65, and lasts until three months afterward. This is the period during which everyone is supposed to file their enrollment for the program. If you miss this enrollment period, you can’t enroll until the general enrollment period which runs from January 1 to March 31 of the following year. Then your benefits won’t begin until July 1.

As you can see, depending upon your birth month, you could end up stuck without insurance if your COBRA runs out before Medicare begins on July 1. You would need to enroll in some other plan in order to maintain coverage for that period of time.

So, regardless of what type of coverage you have when you turn 65, remember to file that initial application for Medicare benefits during your enrollment period. Otherwise, you will miss the deadline and be forced to scramble for coverage until you can get into your Medicare plan.

As always, please call me if you have any questions about retirement planning. We can review all aspects of your plan before you set it into motion, so that hopefully we can avoid any mistakes.

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