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Should I Elect COBRA?

Our featured video today addresses whether to elect COBRA, the temporary extension of group coverage. Please watch the video at healthcarenavigation.com/videos. The decision to elect COBRA is a bit more complicated than it once was because the Affordable Care Act reformed the individual insurance marketplace to prevent pre-existing conditions from consideration when one applies for individual coverage. As long as one’s application is properly completed and submitted timely (within 60 days of loss of minimum essential coverage or during an open enrollment period), individual coverage is guaranteed issue, meaning an application cannot be denied.

Of course, in many situations, those losing group coverage have additional options to consider beyond COBRA and the individual market, like being a dependent on a spouse’s plan or student coverage.

The primary issues to consider in evaluating coverage options are the cost (whether the coverage is subsidized, of course), the product, and the network of providers. Remember that COBRA is temporary so know how long you are eligible for COBRA. Also, always save the documentation associated with creditable group coverage and a COBRA election.

Unfortunately, many organizations routinely offer subsidized COBRA as part of a severance package without regard to the age of the separating employee. This can be problematic for those approaching 65 and those already over 65. According to COBRA rules, COBRA is supposed to end at age 65 when one becomes eligible for Medicare. If you already had Medicare before you were eligible for COBRA, you can elect COBRA but one should only have COBRA as secondary to Medicare A and B, which rarely makes sense unless the COBRA is subsidized. The negative consequences of Human Resources professionals and COBRA administrators not understanding how Medicare should coordinate with COBRA lead to former employees missing their Part B enrollment deadlines and/or believing the COBRA can be primary when according to insurance rules it is secondary for anyone who is eligible for Medicare.

It is understandable that Human Resources professionals are primarily familiar with the group plan and not well-informed about Medicare issues. However, these issues can result in a gap in coverage and/or lifetime premium penalties associated with Medicare Part B delayed enrollment.

Finally, plan ahead. If you intend to elect COBRA, know what your coverage options might be when facing the next transition in coverage and plan the transition to avoid a gap in coverage. Please watch the video and share this information with family and friends. Thank you.

We hope this information has been helpful. Please watch the video and spread the word. Thanks.