Can You Have Both COBRA and Medicare?

Curated by Claudia Shannon / Research Scientist / ishonest

COBRA is a health insurance option for people who have recently left their job. Under COBRA, you’re able to stay with your former employer’s health plan, even if you’re no longer employed. You can keep COBRA coverage for 18 or 36 months, depending on your situation.

If you have Medicare, COBRA can be used to supplement your coverage and help pay for more services. In some situations, using COBRA and Medicare together might save you money.

Can you have COBRA and Medicare at the same time?

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You can have COBRA and Medicare together if you were already enrolled in Medicare when you become eligible for COBRA. For example, if you’re 67 years old and using a combination of Medicare coverage and coverage from your employer but then retire or scale down to part-time hours, you could be eligible for both COBRA and Medicare.

On the other hand, if you become eligible for Medicare while you’re already enrolled in COBRA, your COBRA coverage will end. So, if you leave your job at age 64 and enroll in COBRA, your COBRA coverage will end when you turn 65 years old and enroll in Medicare.

How do COBRA and Medicare work together?

If you have more than one type of insurance coverage, the reimbursement to healthcare professinoal is divided into two types: primary and secondary. This is based on which insurance pays first and which pays second.

If you have Medicare and COBRA benefits, Medicare is your primary payer. This means that Medicare will pay for services first, and your COBRA plan will help pay for any remaining costs.

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For example, when you use Medicare Part B, you generally pay a coinsurance of 20 percent of the Medicare-approved cost for the service. If your COBRA plan has a lower coinsurance or deductible, it can be used to pay for that remaining 20 percent.

CORBA plans may also cover services that Medicare parts A and B don’t, such as dental care, eye care, or medications. These additional expenses may also be covered by separate Medicare Advantage (Part C) or Medicare Part D plans.

How do I switch to Medicare if I’m on COBRA now?

If you become eligible for Medicare while you’re on COBRA, your COBRA coverage will stop. You can enroll in Medicare as normal. You don’t need to take any additional steps. Just make sure you sign up during the initial enrollment window.

The window lasts from 3 months before your 65th birthday to 3 months after. If you enroll after this point, you’ll be charged with a late enrollment penalty.

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If you’re using both Medicare and COBRA together and no longer want your COBRA coverage, you can cancel with the providing insurance company. An information packet from your former company’s human resources department should tell you how to do this. COBRA coverage is month to month, so you can cancel at any time.

Cobra vs. Medicare: How do they compare?

Medicare takes the place of traditional insurance plans. Medicare coverage is provided in parts. Parts A and B make up original Medicare. Each Medicare part covers different services. The parts of Medicare are:

  • Medicare Part A (hospital insurance). Part A covers stays in the hospital, skilled nursing facilities, and other inpatient care settings.
  • Medicare Part B (medical insurance). Part B covers doctor’s visits, ambulance rides, medical equipment, therapies, and other medical services.
  • Medicare Part C (Medicare Advantage). Part C plans cover everything that parts A and B do, with additional coverage for dental, hearing, vision, and sometimes medications.
  • Medicare Part D (drug coverage). Part D covers medications. You can add a Part D plan to original Medicare or to a Part C plan.
COBRA vs. original Medicare

A COBRA plan is likely to cover services that original Medicare doesn’t. Depending on your need for those services, COBRA might save you money. But purchasing a supplemental Medigap plan can also help cover some of those costs and may be less expensive than COBRA. It’s important to read your plan details carefully and compare it with Medicare coverage.

COBRA vs. Medicare Advantage

The cost of Medicare Advantage plans varies depending on the plan you choose and your location. Not all plans are available in all states. You can generally find Medicare Advantage plans that cover services original Medicare doesn’t. Your costs compared to a COBRA plan will depend on the details of the COBRA plans and Advantage plans available to you.

COBRA vs. Medicare Part D
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Your COBRA plan will likely include coverage for medications but you’ll be responsible for paying the entire premium amount. Medicare Part D plans are available at a wide variety of premiums. You can choose a plan that fits your needs and budget.

Is COBRA more expensive than Medicare?

For most people, COBRA will be significantly more expensive than Medicare. In a few circumstances, though, this might not be the case.

Medicare costs

Medicare is divided into parts. Medicare Part A is hospital coverage, and most people do not pay a premium for it. As long as you’re eligible for Social Security or Railroad Retirement Board benefits, you won’t pay Part A premiums.

Medicare Part B is medical coverage, and most people pay the standard premium amount for it. In 2021, this amount is $148.50. So, for most people, Medicare will be less expensive unless their COBRA coverage has a premium that’s lower than $148.50.

COBRA costs
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If the added surcharges for parts A or B apply to you, COBRA might actually be less expensive than Medicare.

For example, if your income as an individual is greater than $500,000 or $750,000 as a married couple, you’ll pay the maximum $504.90 a month for Part B coverage. If you haven’t earned 30 work credits, you’ll pay another $471 for Part A coverage. This means your total costs for parts A and B would be $975.90 a month.

Depending on your previous health plan, COBRA coverage might be cheaper.

How do I choose the best coverage for me?

When you’re looking into Medicare and COBRA coverage, the best choice for you will depend on your situation. Your budget, personal medical needs, and the needs of your spouse or dependents will help you determine the best choice for you and your family.

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Once you leave your job, you have at least 60 days to decide whether to take COBRA coverage. If you’re not already enrolled in Medicare Part B, you’ll have 8 months after leaving your job to enroll. You can use this window of time to weigh your options.

Knowing this information can help you decide which option makes the most sense for you.

The takeaway

COBRA allows you to stay on the health plan offered by your employer even after you’ve left your job. You’ll be responsible for the entire premium amount, including the portion that was being paid by your employer.

You can use COBRA and Medicare together to cover your health needs and the needs of your family. Depending on your plan, COBRA might cover services that Medicare doesn’t, or it might cover them at a lower cost. Medicare is always the primary payer if you’re using Medicare and COBRA together.

Ultimately, the choice between using COBRA, Medicare, or COBRA and Medicare together is up to you. Consider your budget, medical needs, and family situation when you compare your options and their costs.

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