Column 48

Column 48 - May 25- 2014

Employees who attain age 65 and are insured under a small group plan often leave their plan and enroll in Medicare.  They will then purchase Part D Rx benefits and a Medicare supplement.  This strategy can provide better benefits at a lower overall premium cost to all.  One reason for this is that the age 65 and above premiums on small group plans have been dramatically higher.  There are two rates, one for if the employer plan is primary (pays first) and one if Medicare is primary.  Groups with over 20 employees are not able to allow the employee to opt out. 

When a small employer renews their plan to an ACA compliant plan, they will notice that rates for age 65 and above are the same regardless of Medicare Primary status.  This is part of the law that is trying to protect Medicare from absorbing more actively working employees by not allowing these large rates differences. An individual who is concerned that their physician or provider does not "take" Medicare will be grateful for this option to stay on the group plan.

However, the premiums are still quite high compared to the $104.90 for Medicare Part B that most folks will pay. Even adding the Medicare Part D Rx plan will likely not bring it up to the higher premiums on the group plan. 

There is a caveat for high earners. Medicare looks back two years to determine income that sets your Part B and Part D premium rates.  If you are married and income exceeds $170,000, your Medicare Part B premium will be $146.90 and increases as income increases.  For Medicare Part D, the $12.10 is added to your monthly premium.


Individuals on COBRA who missed open enrollment have a 60 day special enrollment period (SEP).  Current COBRA enrollees can enroll in a Covered California health insurance plan through July 15, 2014. This special extension is not available for off-Exchange individual plans.

It's important to know that if you decide to drop COBRA and enroll in a Covered California plan, you cannot change your mind and go back to COBRA. If you drop COBRA, you will not be able to return to your plan.

The Covered CA website explains that after July 15, 2014, you cannot drop your COBRA plan and enroll in a Covered California plan unless it is an open enrollment period at Covered California. You will not be eligible for special enrollment if you stop paying your COBRA premium or cancel your COBRA.  After July 15, 2014, you will not be eligible for a special enrollment unless someone responsible for remitting payments for your COBRA premium (for example, your former employer) fails to do so on a timely basis, you move out of the plan coverage area and there is no COBRA continuation coverage available, or you reach your plan's lifetime limit for benefits. If none of these reasons apply, and unless you have another qualifying life event for special enrollment, you will have to wait until the next open enrollment period to cancel your COBRA and sign up for a Covered California health insurance plan.

Note that if your employer agrees to pay COBRA premiums for a couple of months and you want to apply to the Exchange after they stop paying the premiums, you are not eligible.  This does not create a Special enrollment period.

Again, we caution that it's important to evaluate the difference between COBRA and the Exchange plans.  The subsidy may be very attractive, but beware of the plan difference, particularly network and pharmacy formulary (approved drugs).

The next open enrollment period will be in the fall of 2014.




Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies at press deadline.  Please submit questions to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .