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Can I delay Medicare and stay on COBRA instead?

Consumer Reports News: November 18, 2011 10:38 AM

Q. I’m now covered under my wife’s COBRA plan, which runs through March 2013. I turn 65 on Jan. 5, 2012 but wonder if I should put off signing up for Medicare for a year to stay with COBRA, which costs the same whether or not I’m on it. What do you think?

A. There are several reasons I think that’s a bad idea.

The first problem is whoever administers your wife’s COBRA plan is allowed (but not required) to kick you off once you reach Medicare age. (COBRA, of course, is the federal program that allows workers and their families to remain on an employee group plan for a period of time after leaving a job, whether voluntarily or not.)

Also, if you wait another year to sign up for Medicare, you will be assessed a permanent penalty surcharge of 10 percent of your Part B premium—for the rest of your life. The only way to avoid that penalty is if you have insurance through your or your wife’s current job at a workplace with 20 or more employees. But since neither of you has active employee group coverage at the moment, that doesn’t apply to your situation.

If you miss your initial enrollment period for Medicare you can’t just sign up whenever you want to. If you put off Medicare for another year, you will have to wait until the next General Enrollment Period, which runs from Jan. 1 to March 31 of each year, with coverage starting the following July 1. So your Medicare coverage would start on July 1, 2013—three months after your wife’s COBRA coverage runs out.

Moreover, by signing up late for Medicare, you’ll miss the six-month “guaranteed issue” window during which you are eligible to buy a Medicare supplement (Medigap) plan regardless of your health history or pre-existing conditions.

If finances are a concern, you can join a Medicare Advantage plan that costs you nothing extra beyond your regular Part B premium. I did a search on the plan finder and found several such plans available in your Florida zip code with a more-than-acceptable quality rating of 3.5 stars.

Your wife’s COBRA plan might cover things that Medicare doesn’t, such as dental or vision care. Since your family’s cost is the same whether or not you’re on the plan, you might want to check if you can continue receiving those benefits even if you’re on Medicare.

You are already within your Initial Enrollment Period for Medicare. If you sign up before Dec. 31, 2011, your Medicare coverage will start Jan. 1. Your initial enrollment window extends through the end of April, but if you delay signing up until then, your coverage won’t start until July. Medicare provides a handy online eligibility tool that will guide you through the maze of dates.

Got another question for me? Ask it here. And see our advice on buying and using health insurance.

Nancy Metcalf

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