Medicare and COBRA – What You Need to Know Before Making a Costly Mistake

Will COBRA Cover You After 65?

If you’re retiring or just lost your job, you may be offered COBRA coverage. Sounds good, right? A little safety net before figuring out your next step. But here’s the catch: once you’re Medicare-eligible, COBRA doesn’t work the way you think it does.

I’ve seen too many people burned by this—claims denied, penalties tacked on, and thousands of dollars lost—all because COBRA and Medicare don’t play by simple rules.

Here’s what you need to know before making a mistake you’ll regret.

The Big Question: Medicare or COBRA First?

How COBRA and Medicare work together depends on which coverage you have first.

• Medicare first, then COBRA: Medicare pays primary. COBRA pays secondary.
• COBRA first, then Medicare: Once you’re eligible for Medicare, COBRA drops to secondary. In many cases, it ends for you altogether.

Translation: You can’t use COBRA to “delay” Medicare Part B. Medicare sees COBRA as secondary coverage—not real employer insurance.

Why the Timing Matters

When your employer coverage ends, you only have 8 months to sign up for Medicare Part B without penalty.

• COBRA does not extend this deadline.
• If you wait too long, you could face a lifetime late enrollment penalty (10% higher premiums for every year you delay Part B).

Learn more about turning 65 and Medicare enrollment.

Real-World Example: A Costly COBRA Mistake

Randy, a Medicare-eligible worker, lost his job and went on COBRA. He already had Medicare Part A but not Part B. What he didn’t realize was:

• Medicare became his primary insurance.
• COBRA was supposed to act as secondary—but there was no Medicare Part B for it to back up.
• Claims started getting denied, and Randy was left paying thousands out-of-pocket.

The lesson? If you have Part A only, enroll in Part B as soon as your employer coverage ends.

See more common pitfalls in Medicare mistakes to avoid.

Is COBRA Ever Worth It?

Sometimes. COBRA can make sense if:

• You have a spouse or dependents who aren’t Medicare-eligible yet.
• The plan includes extras (like dental or vision) that you want to keep temporarily.
• You’re willing to pay the higher premiums for short-term peace of mind.

But for most people, Medicare plus a Medicare Supplement or Medicare Advantage plan is usually cheaper and more comprehensive than COBRA.

Don’t Forget Prescription Coverage (Part D)

Here’s another trap: COBRA drug coverage may not be considered “creditable” by Medicare.

• If it’s not creditable, you’ll need to sign up for Medicare Part D within 63 days of losing COBRA or face penalties.
• If it is creditable, you can delay Part D until COBRA ends, but double-check with your COBRA administrator. Most don’t know the rules.

What You Should Do

1. Line up your Medicare coverage before COBRA starts.
2. Sign up for Medicare Part B within 8 months of losing employer coverage.
3. Consider COBRA only if you need it for dependents or unique coverage needs.
4. Double-check whether COBRA includes creditable drug coverage.

Still unsure? Review your Annual Notice of Change and watch for red flags so you’re not caught off guard.

Final Thoughts

COBRA can be a tempting safety net, but once you hit Medicare eligibility, it usually creates more problems than it solves. The biggest mistake I see is people thinking COBRA buys them extra time to delay Medicare. It doesn’t.

If you’re 65 or older, the safest move is to get Medicare Parts A and B lined up as soon as your employer coverage ends. COBRA may still make sense if you need to cover a spouse or dependents, or if you’re trying to keep a niche benefit for a short time. But for most folks, it’s an expensive detour.

The bottom line: don’t assume COBRA equals Medicare coverage. Double-check your timelines, fill out the right forms, and don’t be afraid to ask questions until you’re confident you won’t get stuck with penalties or denied claims.