Why COBRA is Not Creditable Coverage

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What is COBRA?

COBRA, which is short for the Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law that requires any employer that has twenty or more employees and offers health coverage, must give the option to continue that coverage if the employee were to be in a situation in which they would lose the coverage; termination, reduction of hours, retirement, or certain other events. Why COBRA is Not Creditable Coverage
You should always check your local state laws for variations where different COBRA-like laws could apply.

What is covered by COBRA?

Coverages that you receive from an employer are generally covered by COBRA
Dental Coverage
Hearing Coverage
Health Care Coverage
Prescription Drug Coverage
Mental Health Coverage
Alcohol and Substance Abuse Coverage
Medical Spending Accounts
Vision Coverage

What is not covered by COBRA?

Retirement Plans
Disability Insurance
Vacation Plans
Life Insurance

How do I get COBRA?

Listed below are examples of qualifying events that would trigger COBRA

Reduction of hours of employment, (example: Going from full time to part time)
An employee’s death
Active Military Duty when you do not voluntarily have health coverage
Divorce or legal separation of a spouse that is covered from an employee
Aging into Medicare
Not returning to work at the end of FMLA(Family and Medical Leave) when coverage was in effect when the leave began and was lost while on leave
The employer going bankrupt
Termination of employment, voluntary or involuntary, unless it is for gross misconduct (COBRA does not define misconduct)

If COBRA is an extension of my employer coverage, why is it not creditable?

Creditable coverageis defined as health insurance, prescription drug, or other health benefit plan that meets a minimum set of qualifications. Group health plans, individual health plans, student health plans, as well as a variety of government-sponsored or government-provided plans are all types of creditable coverage plans.
One would think if the coverage is virtually the same as the coverage they had through the employer, it would be considered creditable. This statement makes sense but unfortunately it is not the case. Medicare does not consider COBRA creditable coveragewhen it comes to enrolling in Part B.
When you lose or leave your group coverage to go on Medicare you get a 8 month enrollment window to pick up Medicare Part B. You can elect COBRA if you are offered it, but you need to pick up Medicare Part B or you will be subject to a penalty.
The penalty for not picking up Part B when you have an enrollment period to do so is 10% for each consecutive 12 months you do not have coverage. The penalty stays with you for life and never goes away.

Can I pick up Medicare Part B at anytime if I miss my allotted time period?

If you do not pick up your Medicare Part B when you have the enrollment period available to you, you’ll have to wait until the General Enrollment Period (GEP). The General Enrollment Period starts on January 1^stand continues until March 31^stof every year.
When enrolling into Medicare Part B using the General Enrollment Period does not mean your Medicare Part B will start right away. When you use the GEP to sign up, your Part B will not start until July 1^stof that same year.
This unfortunately happens to many seniors every year because they simply do not know.

But I just found this out now and my COBRA is ending?

Unfortunately if this happens to you there are not many options. You can see if there is an Affordable Care Act plan in your area to help you until you can get on your Medicare Part B. When this unfortunate case happens there are not many options, however you could consider a Hospital Indemnity, and a Critical Illness plan to help give some protection.
A Hospital Indemnity Plan, is a reimbursement coverage plan that will pay you for each day you are in the hospital, they can also pay you for doctor visits. You decide on a dollar amount you want or need in the event you must to go to the Hospital or doctor’s office and you pay the insurance company a monthly premium.
A Critical Illness plan is similar. These plans pay you out a lump sum tax free amount if you are diagnosed with a critical illness such as cancer, heart attack, or a stoke. The benefit amounts vary from as little as a $5000 benefit, up to $50,000 with most providers offering this coverage.
Regardless, if you fall into the situation of not having your Medicare Part B on time, these are important coverages to consider.
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