Cobra Insurance and Medicare - May 2023

While Medicare is the best insurance coverage most people will have in their entire lives, navigating the complex enrollment periods and eligibility requirements can leave the unexperienced worse off than before.

In an article from Toni King, she responds to a reader with stage 4 cancer, who was forced into COBRA coverage due to losing their employer-sponsored coverage. After going on COBRA and enrolling in Medicare Part B several months later, the reader was shocked to discover they were responsible for $40,000 of their cancer treatment. The article goes into detail about COBRA, Medicare, and how the reader did the right things but at the wrong time.
Read the full article here Why is COBRA only paying 20% of my Medicare claim?

This article is a perfect example of why timing is everything in Medicare. The reader mentioned had everything they needed for most of the cost to be paid for, but because they took their Part A initially and delayed Part B until they “needed” it, they fell into a (rare but possible) pitfall of the Medicare system.

This chart highlights the potential scenarios this pitfall occurs.

In all of the situations listed where Medicare “Pays First” you could be responsible for a significant portion of medical costs.

You are responsible for costs because Medicare Parts A & B are billed as one entity if it’s the primary payer. This obviously creates issues when you only have Medicare Part A (Which only covers hospitalization) and have delayed B (Which only covers outpatient services.)

Imagine you have COBRA and Medicare Part A when a outpatient specialist bills you for a service rendered.
Medicare will receive the bill first and pay anything it can with your Part A, which will likely be next to nothing, since Part A only covers inpatient services. The remaining costs are then sent to COBRA who will only pay for anything that is NOT covered by Parts A OR B. This results in the majority of costs being unfortunately left to you.

While this situation is complex and rare, it serves as a healthy reminder of the importance of being proactive in your Medicare coverage and making sure you get help before you NEED it.

Let us know if you have any questions regarding this article or your retirement healthcare as a whole!