Please Help your Retirees Regarding COBRA
Last week’s Wall of Shame video was aimed at the federal government for failing to fix the troubled relationship between those who work to age 65 and beyond, are Medicare eligible, and who are offered and then elect COBRA when they retire.
As we’ve discussed, there are two problems:
First, COBRA is considered a secondary source of coverage to Medicare and electing it instead of transitioning to Medicare Part B leads many to receive large medical bills they didn’t expect. Second, many who elect COBRA for 18 months will miss their eight-month Special Enrollment Period for Medicare Part B and must use the General Enrollment Period. The General Enrollment Period is designed to be punitive but the target population for this punishment, typically a gap in medical coverage AND lifetime Part B premium penalties, was intended for those who are cavalier about coverage and choose to be uninsured instead of enrolling in Medicare when they are eligible.
This is a very different population than those who work later in their careers or jobs and elect and pay for COBRA.
Medicare Part B started in 1966. COBRA (Consolidated Omnibus Budget Reconciliation Act) passed in 1985. There has been proposed legislation before Congress to address the COBRA issue but none has been enacted. As we progress toward almost 40 years of the Part B/COBRA problem let’s recognize that 40 years seems ample time for the federal government to address the issue. However, since the federal government has not, one would hope Human Resources departments, COBRA administrators and insurance brokers who sell insurance to businesses could have figured out how to advise people who work to age 65 and beyond of the consequences of electing COBRA when they retire. Unfortunately, our experience suggests this is not common. We’ve seen effective communication in this regard but not enough. In fact, in some cases, we see Human Resources and Benefits staff offering subsidized COBRA to separating employees who are Medicare-eligible which exacerbates this problem because the separating employee has an even greater incentive to elect COBRA.
It is absolutely astounding.
Our call to action is for all those professionals mentioned above to start effectively protecting their people and clients. Also, SHRM (Society of Human Resources Professionals) as an organization, could assume a leadership position in both educating their members and advocating for a fix from Congress.
And of the almost 1 million Americans who are subject to lifetime penalties, those who pay them due to electing COBRA, please write your members of Congress to complain and request relief!