COBRA continuation coverage feels like a safety net when you lose a job or experience another qualifying event. Many people approaching 65 assume they can ride out COBRA until they decide to formally retire, then switch to Medicare at their leisure. That assumption is wrong and expensive. Federal Medicare rules treat COBRA as personal insurance, not active group health plan coverage. The distinction matters enormously: only active group coverage from a current employer with 20 or more employees allows you to delay Medicare Part B without triggering the 10% per year lifetime penalty. COBRA does not meet that test. Retiree health plans from former employers also do not meet that test. Neither does coverage purchased through the ACA Marketplace. The only coverage that lets you delay Part B penalty-free is an active group plan tied to your own current employment or your spouse's current employment at a qualifying employer.
Turning 65 on COBRA also triggers a second decision most people overlook: what happens to the COBRA itself once Medicare kicks in. Under federal COBRA rules, Medicare entitlement after the start of COBRA is a secondary qualifying event that can reduce the remaining COBRA period to 18 months from the original qualifying event date. More practically, Medicare pays first as primary and COBRA becomes the secondary payer once you are enrolled in both. Some COBRA plans will terminate coverage for a person who becomes entitled to Medicare, so you should check your COBRA notice or contact your former employer's COBRA administrator to understand your specific plan's rules. The bottom line for most people turning 65 in 2026: enroll in Medicare on time, compare Medicare Advantage versus Original Medicare plus Medigap, and then decide whether keeping COBRA as a very expensive secondary makes any financial sense given the 2026 Part B premium of $202.90 per month and the Medicare Advantage in-network MOOP ceiling of $9,250.
7 Steps to Get Coverage
Common Mistakes That Cost People Thousands
The most expensive mistakes people make when turning 65 on COBRA. Many of these penalties are permanent:
- Treating COBRA like active employer coverage. COBRA is not active group employer coverage under Medicare law, so it does not let you delay Part B. Missing the 7-month IEP while on COBRA triggers a 10% per year Part B penalty forever.
- Skipping Part D because COBRA includes drug coverage. Check whether your COBRA drug coverage meets the creditable coverage standard. If it does not, going 63 or more days without creditable coverage after Medicare eligibility triggers a 1% per month Part D penalty for life.
- Missing the 6-month Medigap guaranteed-issue window. After your Medigap Open Enrollment Period ends (6 months from Part B effective date), insurers in most states can deny you or charge more based on pre-existing conditions. This window never repeats.
- Assuming the COBRA plan will continue as secondary after Medicare entitlement. Some group health plans terminate COBRA coverage once a qualified beneficiary becomes entitled to Medicare. Verify in writing with your COBRA administrator before assuming dual coverage will continue.
- Not applying for Medicare Savings Programs when income qualifies. If your income is under roughly 135% of the Federal Poverty Level after leaving employment, Medicare Savings Programs can pay your Part B premium of $202.90 per month, but you must apply through your state Medicaid agency.
- Continuing to contribute to an HSA after enrolling in any part of Medicare. Enrolling in Part A or Part B (or both) stops all future Health Savings Account contributions. If you want to keep contributing to an HSA past 65, you must delay both Part A and Part B, which is only safe if you have qualifying active employer coverage.
COBRA vs Medicare: Why Medicare Must Come First
Medicare rules draw a hard legal line between active employer group coverage and COBRA. Active group coverage from a current employer with 20 or more employees is the only type that lets you delay Medicare Part B enrollment without incurring the 10% per year lifetime penalty. COBRA fails this test because it is continuation coverage tied to a former employment relationship, not active current employment. The same rule applies to retiree health coverage, individual ACA Marketplace plans, and short-term health plans. Federal statute at 42 U.S.C. 1395p governs the Part B late enrollment penalty and the conditions under which it can be avoided through a Special Enrollment Period.
COBRA as a secondary payer creates a coordination-of-benefits situation once Medicare is active. Medicare pays first on all claims. COBRA then reviews the claim as secondary and may cover some of the remaining cost-sharing (such as the 20% Part B coinsurance). However, federal law at 42 C.F.R. 411.100-411.108 gives group health plans the option to terminate COBRA coverage when a qualified beneficiary becomes entitled to Medicare. Whether your former employer's plan exercises that option varies by plan. The practical consequence: do not count on COBRA secondary coverage continuing after you enroll in Medicare. Verify explicitly before your IEP begins.
Medicare Enrollment Deadlines: IEP, SEP, GEP, and What Each Costs You
Three enrollment periods govern when you can sign up for Medicare Parts A and B. The Initial Enrollment Period (IEP) is your 7-month window centered on your 65th birthday: 3 months before your birthday month, the birthday month itself, and 3 months after. For a person born September 15, 1961 turning 65 in 2026, the IEP runs June 1, 2026 through December 31, 2026. Enrolling in the first 3 months means coverage starts in the birthday month. Enrolling later pushes the coverage start date further out. The IEP is your penalty-free window and the one that applies to virtually everyone turning 65 on COBRA.
The Special Enrollment Period (SEP) for Part B applies to people who delayed Medicare because they had qualifying active employer group coverage and are now retiring or losing that coverage. Because COBRA is not qualifying active employer coverage, this SEP does not apply to most people turning 65 on COBRA. The General Enrollment Period (GEP) runs January 1 through March 31 each year and is the fallback for people who missed their IEP without a valid SEP. GEP enrollees pay the 10% per year Part B late penalty and coverage does not start until July 1 of the enrollment year. The penalty and the delayed coverage start together represent the two financial consequences of missing the IEP while on COBRA.
Medicare Savings Programs and Extra Help for Lower-Income Enrollees
Medicare Savings Programs (MSPs) are state-administered Medicaid programs that pay some or all Medicare cost-sharing for qualifying lower-income enrollees. Four tiers exist based on 2026 income thresholds. The Qualified Medicare Beneficiary (QMB) program at or below 100% of the Federal Poverty Level covers Part A and Part B premiums, deductibles, and copays. The Specified Low-Income Medicare Beneficiary (SLMB) program between 100% and 120% FPL pays the Part B premium of $202.90 per month. The Qualifying Individual (QI) program between 120% and 135% FPL also pays the Part B premium. The Qualified Disabled and Working Individual (QDWI) program covers Part A premiums for certain younger disabled workers. Apply year-round through your state Medicaid agency; most states use the same application form as Medicaid.
Extra Help (also called the Low-Income Subsidy or LIS) is a federal program that reduces Part D prescription drug costs for Medicare enrollees with limited income and resources. Extra Help can lower drug copays to a few dollars per prescription and eliminate the Part D late-enrollment penalty for qualifying individuals. Income limits for 2026 Extra Help are approximately 150% of the Federal Poverty Level. Apply through the Social Security Administration at SSA.gov or through your state Medicaid agency. Many people turning 65 on COBRA whose employment income has stopped or reduced significantly may qualify for both Medicare Savings Programs and Extra Help for the first time.
HSA Contributions and Medicare: The Conflict You Must Resolve Before Enrolling
Health Savings Account (HSA) contributions and Medicare enrollment are mutually exclusive. Federal law (26 U.S.C. 223) bars HSA contributions for any month in which you are enrolled in Medicare, including Part A only. Many people on COBRA have been contributing to an HSA from their former employer's High Deductible Health Plan (HDHP). Once you enroll in Medicare at 65, HSA contributions must stop. The IRS allows you to spend existing HSA funds on Medicare premiums (including Part B premiums of $202.90 per month), Part D premiums, and qualified medical expenses without penalty even after Medicare enrollment. Only new contributions are prohibited.
Part A retroactivity creates an HSA trap for people who delay Medicare enrollment. Social Security Administration rules automatically make Part A coverage retroactive up to 6 months before the month you apply, but not before the month you turn 65. For a person who applies for Medicare at age 67, Part A could be retroactive to age 66 and 6 months. HSA contributions made during that retroactive period become non-qualified contributions subject to income tax plus a 6% excise tax. People on COBRA who are still contributing to an HSA past age 65 need to stop contributions at least 6 months before applying for Medicare to avoid the retroactivity trap. Consult a tax advisor about your specific situation.
Frequently Asked Questions
Does COBRA count as active employer coverage so I can delay Medicare?
No. COBRA continuation coverage does not count as active group employer coverage under Medicare law (42 U.S.C. 1395p). Only active group health coverage from a current employer with 20 or more employees qualifies for a penalty-free Part B delay. Because COBRA is tied to a former employment relationship, enrolling in Medicare at 65 is required during your 7-month Initial Enrollment Period to avoid the 10% per year Part B late-enrollment penalty. The same rule applies to retiree health plans and individual ACA Marketplace plans.
What is the Part B late-enrollment penalty if I miss my IEP while on COBRA?
Missing your 7-month Initial Enrollment Period while on COBRA triggers a Part B late-enrollment penalty of 10 percent for every full 12-month period you could have had Part B but chose not to enroll. The penalty is permanent and adds to your monthly premium for the rest of your life. At the 2026 standard Part B premium of $202.90 per month, a 2-year delay means an extra $40.58 per month forever. A 5-year delay adds over $100 per month permanently. The penalty is assessed by CMS when you eventually enroll through the General Enrollment Period, January 1 through March 31 each year.
What happens to my COBRA coverage when I enroll in Medicare?
Once you become entitled to Medicare, Medicare generally becomes your primary payer and COBRA shifts to secondary. Some group health plans terminate COBRA coverage when a qualified beneficiary becomes entitled to Medicare; federal COBRA rules permit but do not require this. Contact your former employer's COBRA administrator in writing to confirm whether your specific plan continues as secondary or terminates at Medicare entitlement. If COBRA does continue as secondary, compare its premium (102% of the full group premium, often $500 to $1,800 per month for an individual) against Medigap supplemental insurance, which typically covers the 20% Part B coinsurance for $100 to $300 per month.
When exactly is my Medicare Initial Enrollment Period if I turn 65 in 2026?
Your IEP is 7 months. It starts the first day of the month 3 months before your 65th birthday month and ends the last day of the 3rd month after your birthday month. If you turn 65 on March 10, 2026, your IEP runs December 1, 2025 through June 30, 2026. If you turn 65 on October 1, 2026, your IEP runs July 1, 2026 through January 31, 2027. Enroll in the first 3 months of your IEP for coverage to begin your birthday month. Enrolling in months 4 through 7 delays coverage start by 1 to 3 months.
Can I keep contributing to my HSA while on COBRA at age 65?
Only if you are not yet enrolled in any part of Medicare. Once you enroll in Part A or Part B, HSA contributions must stop. If you plan to delay Medicare past 65 to keep contributing to an HSA, you need qualifying active employer group coverage, which COBRA does not provide. Warning: Part A enrollment is retroactive up to 6 months before application. If you apply for Medicare at 66, Part A can be backdated to age 65 and 6 months, making prior HSA contributions during that retroactive period non-qualified and subject to tax and a 6% excise tax. Stop HSA contributions at least 6 months before applying for Medicare to avoid this trap.
What is the 6-month Medigap guaranteed-issue window and why does it matter?
Your Medigap Open Enrollment Period is a one-time 6-month window that starts the first month you are both age 65 and enrolled in Part B. During this window, Medigap insurers cannot deny you coverage or charge more based on your health history, regardless of pre-existing conditions. Once this 6-month window closes, in most states insurers can medically underwrite Medigap policies and either deny coverage or charge significantly higher premiums. Most people should apply for Medigap during this guaranteed-issue window, even if they are still comparing plans. Missing it is often a permanent financial loss.
What is the Part D late enrollment penalty if I go without drug coverage at 65?
The Part D late enrollment penalty is 1% of the national base beneficiary premium (about $38.99 in 2026) per month for every full month you went without creditable prescription drug coverage after first becoming eligible for Medicare. The penalty is permanent and added to your Part D premium for life. Going 12 months without creditable coverage adds roughly 12% per year to your drug plan premium forever. COBRA drug coverage may qualify as creditable but you must verify this in writing. The 2026 Part D out-of-pocket cap is $2,100 for all Medicare Part D enrollees.
How do I apply for Medicare Savings Programs if my income dropped after leaving my job?
Apply year-round through your state Medicaid agency. Most states use the same Medicaid application form for Medicare Savings Programs. The Qualified Medicare Beneficiary (QMB) program at 100% of the Federal Poverty Level covers the most costs including Part B premiums of $202.90 per month in 2026, deductibles, and copays. The SLMB and QI programs at up to 135% FPL pay only the Part B premium. If your income dropped significantly after leaving employment, you may qualify for these programs for the first time even if you earned too much while working. Apply at healthcare.gov or through your state Medicaid agency portal.
