COBRA and Medicare

Several years ago I learned that COBRA was not considered to be creditable coverage under Medicare rules and regulations. What that meant was that anyone who at age 65 was on COBRA instead of Medicare would be fined when they finally went on Medicare. The fine is 10% per year for every year they were on COBRA instead of Medicare, based on the then current Part B premium. In 2015 the Part B premium was $104.90, in 2016 it is $121.80. As the Part B premium goes up so does the fine. The fine is for the rest of your life. Considering that not being on COBRA saves Medicare money doesn’t seem to be of concern by CMS (CMS oversees Medicare)
At the start of the 113th Congress I approached my Congressman, Dr. Joe Heck about submitting a bill to make COBRA creditable coverage for Medicare recipients so they would not be fined. We also discussed re-instating the Open Enrollment Period (OEP) under Medicare since it was removed by the Affordable Care Act.
He agreed with my assessment and wrote a bill making COBRA creditable coverage and re-instating the OEP for Medicare recipients. Due to the political climate the bill went nowhere.
I approached my trade association (NAHU-National Association of Health Underwriters) to see if they could assist to convince other members of Congress to sign onto the bill so it could be passed.
Finally, it looks like the bill to make COBRA creditable coverage so seniors who take COBRA won’t be fined when they go on Medicare might pass both houses of Congress before the election recess. The only thing the bill doesn’t so is eliminate the current fines on those caught buying COBRA prior to this bill becoming law. Guess we’ll have to work on that in the near future?
Thank you Congressman Dr. Joe Heck for supporting this important piece of legislation and eliminate the fines imposed on unsuspecting seniors.

Len Barend, broker The Barend Agency Inc.


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