COBRA & Medicare
Does COBRA Protect You From Medicare Penalties? What to Know at 65.
If you're turning 65 and your HR department told you, "You're on COBRA, you're covered, don't worry about Medicare" be careful. That well meaning advice can cost you hundreds of dollars a year, for the rest of your life.
Here's the trap, why it happens, and exactly how to avoid it.
Is COBRA "Creditable Coverage" for Medicare?
This is the part almost everyone gets wrong. COBRA is real health insurance. You can go to the doctor and you're covered. But for Medicare purposes, COBRA is not treated as active, employer-based coverage. And that distinction is everything.
When it comes to delaying Medicare Part B without a penalty, what matters is whether you have coverage through current employment. Yours or a spouse's. COBRA isn't that. It's a continuation of a plan after the job has ended. So in Medicare's eyes, being on COBRA is closer to having no employer coverage at all.
HR departments get this wrong constantly, not out of carelessness, but because they aren't Medicare experts. It's the single most common mistake we see with people retiring onto COBRA at 65.
The Part B Late-Enrollment Penalty: A Lifetime Tax
Here's why it matters. Medicare charges a Part B late-enrollment penalty to people who could have signed up but didn't. It works like this:
For every full 12 months you delay enrolling in Part B (when you weren't covered by active employer insurance), Medicare adds 10% to your monthly Part B premium and that surcharge stays for as long as you have Part B. In other words, for the rest of your life.
It is not a one-time fine. It's a permanent, lifetime increase. People sometimes assume brokers exaggerate this as a sales tactic. We don't, it's simply the rule, and once it's applied, there is essentially nothing anyone can do to remove it.
An example (2026 figures, which change yearly): The standard Part B premium in 2026 is about $202/month. If someone rode out two years on COBRA before enrolling, that's a 20% penalty, roughly $40 extra every month, on top of the regular premium, every year for life. Stretch that across a 20-year retirement and you're looking at thousands of dollars paid for nothing but signing up late.
We once worked with a client, a former government employee, who had no idea this penalty existed. By the time she looked at enrolling, the surcharge would have added hundreds of dollars a year on top of her premium. In her specific case, the math meant she was better off staying right where she was. Not everyone is so lucky.
The COBRA Special Enrollment Trap
A lot of people believe COBRA buys them time. It doesn't.
When your active employer coverage ends, Medicare gives you an 8-month Special Enrollment Period to sign up for Part B without a penalty. The catch: that clock starts when your active employment ends. Not when your COBRA runs out. COBRA does not extend the window.
So if you finish working, go on COBRA, and wait until COBRA ends 18 months later to deal with Medicare, the penalty clock has already been ticking the entire time. The window may be gone before you even think to act.
The Small-Employer Trap (Under 20 Employees)
There's a related trap worth knowing. If you're 65+ and still working at a company with fewer than 20 employees, Medicare is generally required to be your primary insurance, your employer plan only pays after Medicare. Skip Part B in that situation and you could effectively be uninsured for most of your claims. It's the same kind of gap as the COBRA trap, just in a different form.
What to Do If You're on COBRA at 65
If you're already on COBRA and at or past 65, here's the move:
Enroll in Part B now. Yes, it will feel like double-paying for a stretch, but the math typically works in your favor within a few years, and it stops the penalty clock cold. Waiting for COBRA to end is the costly mistake.
Talk to a licensed broker about how to coordinate it cleanly, which parts to enroll in, when, and how your COBRA fits in the meantime.
One short conversation can save you from a lifetime of unnecessary penalties.
If you're 65 and on COBRA, or just unsure whether to enroll in Part B — book a free 15-minute call with Part ABC. We'll walk through your exact situation, no pressure.
This article is general education, not personalized advice. Your situation may differ — reach out and we'll look at your specifics.
