Cobra vs Marketplace or Medicare

When an employee retires, they need to check with their HR Dept to see what, if any, coverage will continue once they have been separated from service. If you are lucky enough to receive full retiree benefits that’s great because the company usually covers the cost. If fully paid retirement benefits are not available then you would need to consider either taking the Cobra coverage, coverage through the marketplace, or even Short Term Medical which can sometimes be the most cost-effective solution and this is assuming you are not eligible for Medicare yet. Some employers will let you terminate the Medical coverage but they will allow you to continue with the group Dental and Vision in many cases. Although this is not guaranteed it is worth checking into with your Human Resources Dept to see if you can continue your group Dental and vision because these group coverages are usually better coverage as compared to policies you would get in the individual market. Let’s assume you don’t qualify for fully paid retirement benefits. We’ll discuss the 1st option which would be “Cobra” which is an acronym. It stands for Consolidated Omnibus Budget Reconciliation Act of 1985 and here is the website if you need additional information about Cobra. https://www.dol.gov/general/topic/health-plans/cobra Cobra allows workers and their families the right to continue their Health benefits for a limited period of time usually for a period of 18 months. Based on my experience it is usually very expensive to continue with Cobra coverage because the employer no longer subsidizes your monthly premium so you are forced to pay full price for your Medical coverage. Most of the time these families that are losing their group coverage are better off applying for coverage through the marketplace and be subject to the terms of the ACA or the Affordable Care Act. If you qualify for tax credits based on your annual household income it is usually best to take the Marketplace coverage with (APTC) Advanced Premium Tax Credits. My experience has been that most families get a premium tax credit. This credit is essential for helping families reduce their monthly cost for Health Insurance. Keep in mind there is no tax credit that applies to Dental or Vision, only Medical coverage through the ACA. Find an Insurance agent that will help you make a fair comparison between taking Cobra or other coverage to see which is the most cost-effective solution for your family.

We’ve talked about continuation of coverage if you are not Medicare eligible. Now let’s talk about options if you are losing your group Health Insurance but you qualify for Medicare. Once you turn 65 and let’s say you are still working for a company and in their group plan. Medicare will automatically issue you a Medicare card with Part A Hospitalization coverage and the start date will be the 1st day of your birth month. You can keep just your Medicare Part A as long as you stay on your group health plan. If you are turning 65 and you decide to retire or leave your group plan, regardless of your age, you can opt for Medicare. You can delay your Medicare Part B as long as you want. You can delay until age 75 if you are still working and you have “Creditable Coverage.” Should you decide to leave the group plan and opt for Medicare the 1st question to ask yourself is what is the last day of coverage under my group plan. Once you know that date the next call should be to the Social Security Administration to enroll in Medicare Part B. Make sure to schedule your group coverage to end and your Medicare Part B to start on the 1st of the following month. Oftentimes the husband is turning 65 and the wife is under 65. Depending on your group coverage and the cost it may or may not make sense to take Medicare. You would need to do a simple cost/benefit analysis. That is something your agent can help you with. Let’s just say that the husband decides to choose Medicare and it’s his group plan. Let’s assume the spouse is under 65. The spouse would lose coverage so she would need coverage which she would be able to get through the marketplace and in many cases she could receive a premium tax credit to help lower their monthly cost. Let’s say the group policy is under the spouse’s name and the husband qualifies for Medicare. The spouse would just continue on her group plan and she would remove her husband from the plan since he will qualify for Medicare. They would save the premium they are paying for the husband and she may even be able to continue the group dental and vision coverage for her husband. If not, then there are other options for Dental and Vision coverage through the individual marketplace.

So, if you find yourself in this or any other scenario, I would consult with a Health Insurance/Medicare Agent that can give you the proper guidance. There are many different scenarios and you really need to talk to someone that’s in the know. You are also welcome to call me too. I’d be happy to help!!

Call Gary to discuss your best options.