Covering The Bases: Understanding enrollment for COBRA and Medicare Part B

Q: I am 67 years old and only have Medicare Part A. My job ends this month. I have the option of continuing my insurance under COBRA. Should I enroll in Medicare Part B now or when COBRA ends?

A: Thank you for asking this question now; there are limits as to when you can elect Part B without a penalty and without a delay in enrollment.

It is critical that you understand how COBRA is viewed under Social Security rules. It is most often to your advantage to enroll into Part B sooner rather than later. Let's discuss why.

Social Security has strict rules on when a person may enroll in Medicare Part B without delay and without a penalty. Most people enroll at age 65. However, people who are currently working and currently insured can postpone Part B enrollment and elect a Special Enrollment Period when they stop working. Under a Special Enrollment Period, there is no penalty or delay. Medicare defines the Special Enrollment Period: People can delay enrolling into Medicare Part B without a penalty or a delay in enrollment if "you or your spouse is working and has group health plan coverage based on that work. You can sign up for Part B any time while you have group health plan coverage based on current employment or during the 8-month period that begins the month the employment ends, or the group health plan coverage ends, whichever happens first."

It is critical to know that COBRA is not considered "group health plan coverage based on current employment." When you elect COBRA it is done so because you are not working. Since COBRA insurance does not meet the Social Security definition of "group health plan coverage based on current employment," you could miss your Special Enrollment Period for Part B if you wait too long. Recall, Social Security states you have 8 months after employment ends to elect Part B under a Special Enrollment Period; COBRA typically lasts 18 months. Some people misconstrue COBRA as allowing a Special Enrollment Period and wait too long to request their Part B. These people are shocked to find that Social Security denies their request for Part B under a Special Enrollment Period. They are told they will have to wait for enrollment into Part B and will incur a penalty. Please avoid this scenario. Now is the time to discuss with a Social Security representative your Medicare Part B enrollment options and time frames.

What will the Medicare Part B premium be for 2010?

In 2010, most people will continue to pay $96.40 for their Medicare Part B premium. If:

1. You currently have Medicare
2. Your Part B premium is currently being deducted from your Social Security check
3. Your income is below $85,000 (individual tax return) or $170,000 (joint tax return)

then you will continue to pay $96.40/month for Medicare Part B in 2010. Medicare is not increasing your rates because of a "hold harmless rule" of the Social Security Act that prevents an increase in the Medicare Part B premium since the Cost of Living Adjustment (COLA) is not large enough to cover an increase in the Part B premium.

However, people who are new to Medicare Part B, or who do not currently have their Part B premium withheld from their Social Security benefit will have a higher Part B premium. These people will pay $110.50/month for Medicare Part B.

People with incomes above $85,000 (individual tax return) or above $170,000 (joint tax return) will have to pay premiums above $110.50/month. If you fall into this income category, you will want to contact 1-800-Medicare or Social Security at 1-800-772-1213 for information on the monthly Part B premiums you will be charged in 2010.

Amy Rubino is the director of the Senior Health Insurance Assistance Program for the Anne Arundel County Department of Aging and Disabilities. You can reach SHIP at 410-222-4464 or ship_program@aacounty.org.