What happens if I take COBRA instead of Medicare?
The short answer
Taking COBRA instead of Medicare when you turn 65 is usually a costly mistake. COBRA is not considered creditable coverage for Medicare purposes, and you could face permanent late enrollment penalties.
The full explanation
COBRA lets you keep your employer health insurance for a period after leaving a job, but it comes with a catch most people don't realize. Once you turn 65 and are eligible for Medicare, COBRA is no longer considered creditable coverage for Part B. That means the clock starts ticking on your Medicare enrollment window whether you take COBRA or not.If you skip Part B to keep COBRA and miss your Initial Enrollment Period, you'll likely face a late enrollment penalty when you do sign up. That penalty is 10 percent added to your Part B premium for every 12-month period you delayed. It stays with you for as long as you have Part B, which for most people means the rest of their life.The situation that trips people up most often involves people who retire at 65 and assume COBRA is a safe bridge. It can feel like real insurance coverage, because it is your same old plan. But Medicare treats it differently once you're eligible for Medicare.The rule that lets you delay Medicare without penalty, avoiding the late enrollment penalty, applies when you have coverage through active employment, meaning you or a spouse is still working and the insurance comes through that current job. COBRA is not active employment coverage.If you're in this situation, sign up for Medicare on time, and then evaluate whether COBRA makes sense as a secondary supplement for a short period while you sort out additional coverage.
Related Medicare Resources
