Enrolling in Medicare does not cause COBRA to start. Under the fed­er­al rules, COBRA must be offered to per­sons enrolled in the employer’s health plan only if they lose cov­er­age because of cer­tain spe­cif­ic events. Ter­mi­na­tion of employ­ment is an exam­ple of a COBRA qual­i­fy­ing event. Becom­ing eli­gi­ble for Medicare, or enrolling in Medicare, is not a COBRA qual­i­fy­ing event.

On the oth­er hand, if some­one is already on COBRA due to a pri­or event, and then they enroll in Medicare, COBRA will end. Ear­ly ter­mi­na­tion of COBRA due to Medicare enroll­ment only affects that per­son. If oth­er fam­i­ly mem­bers also are on COBRA, they may con­tin­ue for the remain­der of the COBRA peri­od assum­ing their pre­mi­ums are paid when due and they do not enroll in Medicare or anoth­er group health plan.

Let’s look at anoth­er sce­nario: An employ­ee enrolls in Medicare while con­tin­u­ing as an active employ­ee cov­ered under the employer’s health plan. Then the employ­ee leaves the com­pa­ny. This will trig­ger a COBRA offer since loss of cov­er­age due to ter­mi­na­tion of employ­ment is a COBRA qual­i­fy­ing event. Can the for­mer employ­ee elect COBRA despite being enrolled in Medicare? Yes, because they were already enrolled in Medicare before they elect­ed COBRA. They prob­a­bly will choose not to elect COBRA due to the cost, and since Medicare will be the pri­ma­ry claims pay­er, but they have the choice.

There is one oth­er rule about COBRA and Medicare that can be con­fus­ing. As we said, the employ­ee who enrolled in Medicare while still work­ing and cov­ered under the employer’s plan lat­er had a COBRA event. When loss of cov­er­age is due to ter­mi­na­tion of employ­ment, the COBRA con­tin­u­a­tion peri­od is 18 months. Due to a spe­cial pro­vi­sion in the COBRA rules, the max­i­mum COBRA peri­od for the spouse or child (if also enrolled in the employer’s health plan when the COBRA event occurred) might be longer than 18 months. If the employ­ee had first enrolled in Medicare no more than 18 months before the COBRA event, the max­i­mum peri­od for the spouse and chil­dren is 36 months count­ing from the employee’s Medicare enrollment.

For instance, let’s call the active employ­ee Mary and say she enrolled in Medicare in Jan­u­ary 2021 and then lost her group cov­er­age when she ter­mi­nat­ed employ­ment in May 2021. So, she enrolled in Medicare few­er than 18 months before her COBRA event. Her max­i­mum COBRA peri­od will be 18 months count­ing from May 2021, but COBRA for her spouse and chil­dren (if enrolled) could run for up to 36 months count­ing from Jan­u­ary 2021.

Last­ly, employ­ers some­times ask whether they can auto­mat­i­cal­ly ter­mi­nate an employee’s (or spouse’s) group health cov­er­age at age 65. Due to the fed­er­al Medicare as Sec­ondary Pay­er (MSP) rules, employ­ers with 20 or more work­ers can­not take into account anyone’s poten­tial Medicare sta­tus in admin­is­ter­ing the group health plan. An employ­er with few­er than 20 work­ers also may be pro­hib­it­ed from bas­ing health plan eli­gi­bil­i­ty on the employee’s age due to the fed­er­al Age Dis­crim­i­na­tion in Employ­ment Act (ADEA). We rec­om­mend employ­ers review these mat­ters with legal counsel.

By Kath­leen A. Berg­er, CEBS

Orig­i­nal­ly post­ed on Min­er­al