Medicare COBRA Trap Archives | Georgia Medicare Plans

If you or your spouse continued to work past age 65 and continuously covered by EGH (Employer Group Health) as your primary insurance, you can still enroll in Medicare Part B without delay or LEP (Late Enrollment Penalty)

How to enroll in Medicare after group health insurance

How to Enroll in Medicare When SSA Offices are Closed

Social Security offices are now closed to the public for in-person service. Traditionally, this was the only way to get Part B when you already had Part A (such as for those coming off a group). There are new procedures in place due to the Covid-19 pandemic.

Now, Social Security is allowing folks with Part A to fax in the CMS-40B (application for Part B) as well as the L564 (Request for Employment Information) along with proof of employment or Group Health Plan to 833-914-2016.

The employer does NOT currently need to sign Part B of that form, just go ahead and send it. Local offices may only check their mail once a week, so faxing to this main number is best. It is currently taking about a week to process the paperwork. For updates, see the Social Security Coronavirus web page as well as the Information for Groups page.

Send BOTH forms (CMS-40B and L564) at the SAME TIME.

Get Your Medicare number When You Don’t Have Your Card

Log in to your MySSA account and look for a link labeled View Benefit Details under the Benefits and Payments section. Click the link and scroll down to Get a Benefit Determination Letter. Click that link and it will open a window with a Benefit Letter. You can save and/or print the letter. Scroll down about 3/4 of the way and will see your Medicare number.

Note When you want to enroll in Medicare and are completing the CMS L564

State on the form “I want Part B coverage to begin (MM/YY)”
If possible, your employer should complete Section B.
If your employer is unable to complete Section B, please complete that portion on behalf of your employer without your employers signature and submit one of the following forms of secondary evidence:
- income tax form that shows health insurance premiums paid;
- W-2s reflecting pre-tax medical contributions;
- pay stubs that reflect health insurance premium deductions;
- health insurance cards with a policy effective date;
- explanations of benefits paid by the GHP or LGHP; or
- statements or receipts that reflect payment of health insurance premiums.

Eighteen Months to Enroll in Medicare or Two Months?

Remember, coming off of Cobra is NOT the same as coming off of a group where you are covered as an Active Employee. Beneficiaries have 8 months from the time they are covered as an Active Employee to apply for Part B. If they miss that window, even if they are covered by Cobra, they will have to enroll in Part B during the General Enrollment Period, which means applying January through March for a July effective

Avoid the COBRA Trap!

CMS rules grant you an 8 month window after leaving employer group health insurance if you need to enroll in Medicare Part B. If you are 65 or older you have 8 months to enroll in Medicare Part B without penalty or delay.

But if you take COBRA the 8 month window no longer applies. Enrolling in COBRA means you could wait a year or longer before your Medicare Part B is effective. And you will pay a LIFETIME late enrollment penalty.

As if that isn’t enough, without Medicare Part A and B in place you cannot buy a Medigap plan or enroll in an Advantage plan. All you could have is Part A and a Part D drug plan.

Employer group health insurance is considered creditable DRUG coverage but the health coverage is NOT deemed creditable by Medicare.

If you follow all this you can enroll in Medicare without falling into the trap.

Do I have to enroll in Medicare if I am still working?

You are not REQUIRED to enroll in Medicare at age 65 if you are covered under an employer group health insurance plan. SOME employer plans are secondary to Medicare. If that is the case for you, then you will WANT to sign up for Medicare.

What qualifies as a Medicare SEP (Special Enrollment Period)?

Involuntary loss of employer group health insurance can create an SEP for you. You may also be entitled to enroll in a Medicare supplement plan without answering health questions.

Can I have employer group health insurance AND Medicare?

Yes, you can have BOTH employer group health insurance AND Medicare. But doing so may be a waste of money. It is unlikely that Medicare Part B will pay any claims if they are secondary to your group health plan. Also, enrolling in Medicare may disqualify you from making HSA contributions.

Can I drop employer group health and have Medicare as my primary coverage?

I have clients who have continued to work past age 65, dropped their group health insurance, and used Medicare as their primary plan. Often their out of pocket savings for medical claims is thousands of dollars LESS than it would be under a group health insurance plan.

COBRA Trap Means Late Enrollment Penalty

Even though COBRA has been around for over a quarter of a century, most people do not understand their COBRA rights. They believe COBRA is only available to family members if the former employee ALSO elects COBRA.

In reality, every covered family member have COBRA rights separate from the other. A non-working spouse or child can exercise their own COBRA rights even if the former employee does not.

Bill Bregar Was Bitten

This confusion plus the recession has led to problems when the age 65+ COBRA participant enrolls in Medicare once COBRA ends.

Under current law, working Americans with employer health coverage can postpone signing up for Medicare until after 65. When they retire, accept a buyout or are laid off, they then get an eight-month special enrollment period to sign up for Medicare Part B (which covers doctors visits and other outpatient services) immediately and without penalty.

But many people in these circumstances are able to extend their employer coverage for a year or two under a 1986 law known as COBRA, which is what Bregar did.

What they may not realize is that waiting until their COBRA coverage expires to enroll in Part B disqualifies them from the eight-month grace period. Instead, they must wait to sign up during open enrollment, from Jan. 1 to March 31 each year. And coverage won’t begin until the following July. They also get hit with a late penalty, an extra charge added permanently to their Part B premiums.

This COBRA trap will catch you off guard if you do not know about it, triggering an LEP (late enrollment penalty) from Medicare.

Avoid the Part B Penalty

the crucial Medicare regulation barring a special enrollment period for people whose COBRA coverage is ending is rarely publicized. It is not mentioned in the Department of Labor’s guidance for people considering COBRA. The penalty mentioned briefly on page 18 of the official handbook, “Medicare & You 2020” . However, there is not any warning of a delay in Part B coverage. It isn’t included in Social Security’s general website information on enrolling in Medicare or in its frequently-asked-questions section. But you can enter “COBRA” into the site’s search engine leads to an explanation.

This is a real problem that was never anticipated when COBRA laws were written.

Avoid the Medicare COBRA Trap

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2 Basic Ways to Enroll in Medicare After Losing Group Health Insurance