Married with COBRA,Turning 65 and healthcare.gov

For those who are offered COBRA by large employers, and that period extends to the time that a person becomes eligible for Medicare, people face a very complicated situation due to the way that you can (or cannot) enroll in the Federal Marketplace (www.healthcare.gov). 

COBRA Doesn’t Allow You to Defer Medicare Enrollment

The underlying fact is that COBRA cannot be used as an “excuse” to delay enrollment in Medicare. You will incur the Part B Late Enrollment Penalty. If your COBRA coverage is deemed to be “creditable coverage,” then you will be able to select a standalone Part D plan (prescription drug plan) without the penalty, by using a Special Enrollment Period.

Federal Marketplace Complicates Matters

You can choose to NOT accept COBRA when it is first offered to you, and select a private health insurance plan through the Federal government website, along with tax subsidies and perhaps, lower deductibles, copays and out-of-pocket maximums, in accordance with the PPACA. Special note: the lower deductibles, copays and out-of-pocket maximum provisions are the subject of Federal lawsuits at the current time.

You cannot choose to voluntarily cancel COBRA mid-year, outside the Federal Marketplace Open Enrollment Period (Nov 1 – Jan 31), and simply choose a private health insurance plan on the Federal Marketplace. You can voluntarily cancel COBRA during the Federal Marketplace Open Enrollment Period, which runs from November 1 through January 31st.

Why Does This Matter?

This matters when you are married. In that instance, let’s say that you, as the employee, and your spouse, are covered by COBRA. The employee becomes eligible for Medicare. It is the case that Medicare-eligibility WILL allow you to cancel COBRA coverage, and enroll in Medicare (and Medicare Advantage, or Medigap, and/or Part D) without a problem.

Confusion arises because it may not be obvious what the spouse, who is not eligible for Medicare, can do. Normally, you would think that the Federal Marketplace wouldn’t allow entry, but that is for the employee only. However, the spouse of the employee can claim loss of coverage, because the employee has become eligible for Medicare, and thereby, will be allowed into Federal Marketplace. Therefore, the employee can enroll in Medicare, and the spouse can enroll in the Federal Marketplace.

Isn’t It Easier to Simply Refuse COBRA? Maybe, but….

For those that examine premiums and benefits of COBRA, and compare them to the premiums and benefits available in the private market (on or off the exchange), it is difficult to conclude that COBRA is ever the superior choice. However, there are notable exceptions to this. There is no shortcut to comparing the cost-sharing under a non-COBRA plan to the premiums, deductibles and out-of-pocket maximum that you are likely to incur under the COBRA-provided plan. That is particularly the case when you may be eligible for Medicaid Expansion, which depends on the state, and further, the lower deductibles and out-of-pocket maximums that are currently in place for those that qualify.