Employee Benefits |FJG/FYI
Benefits Compliance FAQ
Question: We have an employee who
is enrolled in our group medical plan, is
eligible for Medicare and will be retiring
soon. How will Medicare affect his
COBRA eligibility and benefits?
Answer: Medicare “entitlement” means that an individual is eligible for and enrolled in Medicare. Enrollment in Medicare Part A (hospital benefits) is automatic for an individual who receives Social Security benefits. An individual who is not yet receiving Social Security benefits would need to apply for enrollment in Part A.
Enrollment in Medicare Part B (medical
benefits) is not automatic and requires an
enrollment application. Enrollment in Part
B may be delayed by an individual who
has group medical coverage as an active
employee (which does not include COBRA
coverage, since the COBRA participant is
not an active employee). An individual may
enroll in Part B during the 8-month period
that begins the month their employment
or the group health plan coverage ends,
whichever comes first, without being
subject to penalties which may include a
higher premium. (42 CFR 407.20)
If an individual is entitled to (i.e., enrolled
in) Medicare prior to electing COBRA,
the individual is eligible for the full period
of coverage under COBRA. However, if
the individual is entitled to Medicare after
electing COBRA, the former employers’
medical plan may have an option to terminate
the COBRA individual’s coverage, if it
is written in the plan document. This is
a plan choice, not a requirement, and the
procedure/process should be included in
the plan’s documents. (ERISA 602(2)(D)
(ii))
Additionally, Medicare is the primary payer for an individual that is covered by both COBRA and Medicare, regardless of the size of the employer. (42 CFR 411.175(a) (5))