I recently wrote about helping a number of people who continued working past 65 and were confused about enrolling in Part B of Medicare.  Apparently there is more confusion, and it has to do with people who use COBRA when they leave their job.

Do not use COBRA if you are over 65!  1) It is more expensive than paying for Medicare Part B plus a Plan F Medicare supplement; 2) Medicare doesn’t want you to use COBRA and will penalize you for not enrolling in Part B soon after your employment ends.

I received an alert from the Center for Medicare Advocacy:

Advocates are seeing an increase in the number of Medicare beneficiaries who have delayed enrolling in Medicare Part B, thinking, erroneously, that because they are paying for and receiving continued health coverage under COBRA, they do not have to enroll in Medicare Part B.  COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period (SEP) to enroll in Part B after their COBRA coverage ends. (They may, however, qualify for a SEP to enroll in Part D at that time if the drug coverage they had under COBRA constitutes creditable coverage.) Only individuals who delay enrolling in Part B because they are covered under an employee group health plan (EGHP) by reason of “current” employment may take advantage of the SEP rules. Individuals on COBRA do not meet the definition of having current employment status

Consequences

Medicare Part B – The consequences of delayed Part B enrollment can be severe.  Generally, the beneficiary who does not enroll during his or her initial enrollment period and who is not entitled to a SEP must wait to enroll in the next general enrollment period (January – March of the year), with benefits starting on July 1 of that year.  Further, there is a 10% late enrollment penalty added to the standard monthly premium for every 12 months of delayed enrollment in Part B.  The penalty has no durational limit.

Medicare Part D – Under Part D, the penalty is 1% of the national base beneficiary premium in a given year times the number of full, uncovered months of eligibility without other creditable drug coverage. A Part D eligible individual must pay the late penalty if there is a continuous period of 63 days or longer at any time after the end of the individual’s initial enrollment period during which the individual meets all of the following conditions: (1) The individual was eligible to enroll in a Part D plan; (2) The individual was not covered under any creditable prescription drug coverage; and (3) The individual was not enrolled in a Part D plan.