What Your Employer May Not Tell You About COBRA and Medicare

Jessi Jennings • June 14, 2025

The Consolidated Omnibus Budget Reconciliation Act – known as COBRA – offers a way for workers and their families to maintain their employer-provided health insurance during situations such as job loss, a reduction in hours worked, transition between jobs, divorce, and other life events.


COBRA is a valuable lifeline for many. But if you are nearing age 65 and plan to enroll in Medicare, there are some things you need to know before you decide to elect COBRA coverage in order to avoid gaps in coverage – and potentially costly penalties.

Understanding COBRA Basics

This federal law generally requires that group health plans sponsored by employers with 20 or more employees offer workers and their families the opportunity for a temporary extension of health coverage – called “continuation coverage” – in specific instances where coverage under the plan would otherwise end.


Generally, your coverage under COBRA will be the same coverage you had while you were an employee. This is helpful if you want to continue to see your same doctors and receive the same health plan benefits. Your spouse, former spouse, and children are also eligible for continuation coverage, even if you decide not to sign up for coverage for yourself.


You have 60 days to choose whether or not to elect continuation coverage once your employer-sponsored benefits end. While COBRA is temporary, the law requires that continuation coverage extend for a limited period of 18 months (36 months in some cases) to allow you to explore other health insurance options.


Electing COBRA and Enrolling in Medicare

If you are 64 years old and get laid off, you may think you can elect COBRA coverage for the full 18 months and then sign up for Medicare once your COBRA coverage ends. While this is a reasonable assumption – one we have seen many clients make – it is not necessarily a wise choice. Here’s why:


If you have COBRA and are eligible for Medicare, COBRA may only pay a small portion of your medical costs – leaving you to pay most of the costs yourself. To avoid unnecessary medical bills, you may need to enroll in Medicare Parts A and B right away.

If you become eligible for Medicare after you’ve signed up for COBRA, your COBRA benefits will end when you turn 65, no matter how many months of continuation coverage you were offered.

Whether you choose COBRA or not, you have 8 months to sign up for Medicare Part B without a penalty. If you miss this period, you will have to wait until January 1 - March 31 of the following year to sign up, and your coverage will start July 1. This may cause a gap in your coverage, and you may have to pay a lifetime Part B late enrollment penalty.


Avoiding Coverage Gaps and Late Enrollment Penalties

Before making any decisions about your health insurance, speak with your employer about the specific COBRA rules and regulations that apply to you. For example, you may be able to elect continuation coverage for the number of months you will need insurance before turning 65.


It’s important to sign up for Medicare before — or soon after — your employment ends to protect yourself from coverage gaps and late enrollment penalties. For most people, Medicare eligibility starts three months before they turn 65 and ends three months after they turn 65.


New to Medicare?

You may find it challenging – if not downright overwhelming – to understand the options and get the coverage that’s right for you. An experienced Medicare agent will give you the guidance you need to make educated decisions about the type of coverage you want.


With over 20 years of experience, we promise you an honest and eye-opening conversation about how Medicare works and what your choices are. And we never charge for our services. Contact Bruce today to schedule a complimentary consultation.

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