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
Part B Entitlement
Timing Rules of Medicare and COBRA
Whether an individual has the right to elect COBRA depends on the timing of Medicare entitlement.
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.