Many employers are under the erroneous understanding that an individual cannot have both COBRA and Medicare coverage.
In the 1998 case Geissal v. Moore Medical Corp., the U.S. Supreme Court held that an employer may not deny COBRA continuation coverage to a qualified beneficiary who is covered under another group health plan at the time he makes his COBRA election. To deny COBRA coverage, the beneficiary must "first become" covered under another plan after the date of a COBRA election.
“Another group health plan” for these purposes includes Medicare coverage. If an individual is age 65 and covered under Medicare at the time of his or her qualifying event, the individual must be given the right to continue coverage under COBRA.
Employers will be well-served to understand the interplay of Medicare and COBRA. Medicare consists of different parts. Part A is Hospital Insurance, Part B is Supplemental Medical (doctor visits), Part C is Medicare Advantage coverage, and Part D is Prescription Drug coverage. For COBRA purposes, the Parts at play are Medicare Part A, B or C.
Medicare Entitlement
An individual is covered under Medicare if the person is “entitled” to Medicare. Being entitled to Medicare means the person is actually enrolled in Medicare and receiving benefits.
Enrollment in Medicare is automatic for some people. It is automatic at age 65 for people who are already receiving Social Security benefits when they reach age 65. Other people must file an application to become entitled to benefits (for example, a working person who is eligible to receive Social Security benefits but has not applied for them).
Part A Entitlement
- A person is entitled to Part A based on Age if the person is age 65 AND
- Applied for and receiving Social Security retirement benefits (entitlement is automatic without an application); or
- Filed application for Part A benefits and not receiving Social Security retirement benefits.
- A person is entitled to Part A based on End Stage Renal Disease (Need application for entitlement)
- Has ESRD and is
- Covered under Social Security, or
- Entitled to Social Security retirement benefits, or
- Spouse or dependent child of person meeting the above criteria
- Filed an application for Medicare Part A
- Satisfied any waiting period.
- Has ESRD and is
Part B Entitlement
- A person is automatically entitled to Part B if the person
- Is entitled to Part A,
- Does not decline enrollment, and
- Pays any required premiums.
Timing Rules of Medicare and COBRA
Whether an individual has the right to elect COBRA depends on the timing of Medicare entitlement.
- Medicare Entitlement Before COBRA Election. A qualified beneficiary who is entitled to Medicare at the time of or before the COBRA election has a right to elect COBRA and have dual coverage during the entire COBRA coverage period.
- If the covered employee becomes entitled to Medicare in the 18 months before the COBRA event, then the maximum coverage period for the spouse and children ends 36 months after the employee’s Medicare entitlement date.
- Medicare Entitlement After COBRA Election. COBRA can be cut short (terminated early) if the qualified beneficiary becomes entitled to Medicare afterelecting COBRA.
- Note that COBRA coverage cannot be ended early for covered family members who are not entitled to Medicare.
- Also note that as described above, Medicare entitlement means both eligibility and actual enrollment.
Medicare Secondary Payer Rules and COBRA
The Department of Labor has detailed rules on whether Medicare or COBRA pays primary in a dual coverage situation. The general rule is that Medicare pays secondary in most situations where there is other active employer group health plan coverage. There are different rules when the employer coverage is through COBRA.
If the COBRA continuant has Medicare due to Age, Medicare pays primary. If the COBRA continuant has Medicare due to Disability, Medicare pays primary. If the COBRA continuant has Medicare due to End Stage Renal Disease, Medicare is the secondary payer for first 30 months of person’s Medicare eligibility and after that, Medicare pays primary.
Employers should familiarize themselves with the interplay of COBRA and Medicare coverage.
