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Does COBRA or Group Coverage Impact Medigap?

Christian Worstell

by Christian Worstell | Published October 30, 2023 | Reviewed by John Krahnert

Having COBRA insurance or group coverage from your employer might affect the cost of Medicare Supplement Insurance, also known as Medigap, once you are ready to buy it. Whether or not it will depends largely on when you enroll in Medicare after you are done receiving health benefits from your employer. Read on to learn more about the relationship between employer health insurance and Medigap.

Will Having COBRA Insurance or Employer Group Coverage Impact the Cost Medicare Supplement Insurance?

The answer to this question depends on how long you have been off of your COBRA insurance or group health insurance plan before you decide to purchase a Medigap policy. Before we get into that, let’s start with how your employer insurance affects Medicare.

Employer Insurance and Medicare 

If you decide to keep working past 65, your employer is usually required to allow you to keep your group insurance coverage until you decide to retire. If you decide to opt out of Medicare Part B benefits until you are ready to stop working, you should qualify for a Medicare special enrollment period, meaning you will not be charged a late enrollment penalty when you sign up for Medicare Part B. This special enrollment period begins the first month your group coverage ends and lasts for the subsequent eight months

COBRA Insurance and Medicare

COBRA insurance differs from regular employer group coverage because COBRA insurance is only a temporary continuation of health care from an employer after a change in employment status (like a termination or a layoff).

If you become eligible for Medicare while receiving COBRA benefits, Medicare will become your primary health insurance when you sign up. That means Medicare will pay out benefits first, then you can submit remaining costs to the employer plan

You are not entitled to a special enrollment period when your COBRA coverage ends, unlike typical group coverage. If you decide not to sign up for Medicare initial enrollment period because you have COBRA benefits, you may have to pay a late enrollment penalty (10 percent for every 12-month period that goes by before signing up) when you decide to enroll.

To avoid having to pay extra for the rest of your time on Medicare, you should sign up for Medicare Part B when you are first eligible, regardless of any COBRA benefits you are receiving.

How Do Enrollment Periods Affect Medigap? 

So now that you know a little bit more about Medicare special enrollment periods for group coverage, we can start talking about how they impact the cost of Medicare Supplement Insurance.  

If you sign up for Medicare during your initial enrollment period or an approved special enrollment period, you are then eligible to sign up for Medigap during your Medigap open enrollment period. Your Medigap open enrollment period lasts for six months and begins the month you are both 65 and signed up for Medicare Part B.

For example, if you wait two years after turning 65 to retire and leave your employer group coverage, your Medicare special enrollment period will begin once you leave your job, and your Medigap open enrollment period will begin once you sign up for Part B.

Signing up for Medigap during your Medigap open enrollment period will ensure that you are not charged extra for your Medigap policy. If you miss the deadline to sign up for Medicare because of COBRA insurance coverage (or any other reason), you can also miss your Medigap open enrollment, which would likely result in higher premiums or being denied Medigap coverage all together.

Keep Reading

Learn more about Medigap with this recommended reading:

The Costs of Medicare Supplement Insurance

Medicare Supplement Insurance Plans

What Does Original Medicare Cover?


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