COBRA does not count as “Creditable Coverage”

Unless you are working past age 65 and receiving employer group health insurance (from a company with 20 or more employees), it is essential that you enroll in Medicare Part A and Part B during your Initial Enrollment Period (IEP) – this is the 7 month window around your 65th birthday. This period includes 3 months BEFORE the month of your 65th birthday, the ACTUAL month of your 65th birthday and 3 months AFTER your 65th birthday. (Example – if your birthday is June 10th, you can enroll in Medicare Part A and Part B as early as March 1st and all the way through to September 30th). If you don’t enroll in Medicare Part A and Part B during this Initial Enrollment Period (IEP) because you are still working past 65 and getting group health insurance from a company with 20 or more employees, that’s okay as long as when you go to enroll in Medicare Part A and Part B later, you provide your local Social Security with proof of “creditable coverage” that you had from your employer. (Insurance from employers with less than 20 employees doesn’t count as “creditable coverage”). You will have 8 months in which to enroll in Medicare after your employer coverage ends. You will be afforded a Special Enrollment Period (SEP), which will allow you to enroll in Medicare Part B late without a penalty (NOTE- There is no Late Enrollment Penalty for Part A (Hospital) Insurance, as Part A does not have a premium for most people who worked 10+ years in the US and paid Medicare taxes. Since Part A is premium-free, we recommend you simply enroll in Part A (Hospital) during your Initial Election Period (IEP) right around your 65th birthday, even if you are not ready to enroll in Part B – Medical). When you go to use the Special Enrollment Period (SEP) and enroll in Medicare Part B for the first time, you will need to complete the following two forms and mail or bring to your local Social Security office.

CMS 40B – You complete form
CMS L564 – You and your previous employer(s) complete
(one form for each company you worked for after age 65)

If you had COBRA insurance instead of regular group health insurance from your employer, Social Security will NOT accept COBRA as “creditable coverage” and you may be charged a Part B Late Enrollment Penalty of 10% of the Part B monthly premium for each 12 month period you went without being enrolled in Medicare Part B, when you could have after you turned 65. For example, if you went 2 years without enrolling in Medicare Part B after you turned 65 (and didn’t have creditable coverage), you would be charged a Late Enrollment penalty of 20% (two 12-month periods). If the current monthly Part B premium is $170.10 (for most people in 2022), your penalty would be $170.10 x 20% = $34.02. Therefore your new Part B monthly premium would now be $204.12. This 20% penalty will stay with you for as long as you have Medicare Part B, so essentially you will be charged this penalty for the rest of your life.