If you retire from your job or cut back your hours, your employer may offer you COBRA as a way to keep your health benefits in place temporarily. And if you’re under age 65, that can be a solid short-term plan while you arrange for another source of health coverage.
But if you’re already eligible for Medicare, your decisions around COBRA can be a bit trickier. Making (incorrect) assumptions or timing mistakes could leave you with higher health care costs, major coverage gaps, and even lifetime financial penalties.
In this article, we’ll talk about the big mistakes to avoid so you can make smart, timely decisions about your Medicare and COBRA options.
What are some common COBRA and Medicare pitfalls?
Below are some typical missteps older adults make when it comes to COBRA and Medicare.
1. Assuming COBRA takes the place of Medicare: This is a big one. It’s true that if you have active group employer coverage and your company has 20 or more employees, you may be able to delay signing up for Medicare without penalty.
But since it’s not based on current employment, COBRA does not count as active employer coverage, or “creditable coverage.” Therefore, it does not allow you to delay Medicare without penalty. (Note: COBRA drug coverage works differently and can sometimes allow you to delay Medicare Part D. More on that later.)
That means if you’re eligible for Medicare and you’ve left your job, you should enroll in Medicare Part B (Medical Insurance) in most cases—even if you elect COBRA. You have eight months to sign up for Part B after your active employment or active employer health coverage ends, whichever happens first. This is called a Special Enrollment Period (SEP).
If you miss your eight-month SEP, you’ll have to wait until the General Enrollment Period (January 1–March 31) to sign up for Part B. Your coverage won’t start until the following month after you enroll.
This delay can subject you to gaps in coverage and a permanent late enrollment penalty. For Part B, your premium increases by 10% for each full 12-month period you could have had Part B but didn’t (and didn’t have employer-sponsored coverage). In 2026, the standard premium is $202.90.
Missing the Medicare Part B Special Enrollment Period can result in a hefty late enrollment penalty that lasts for the rest of your life.
2. Believing COBRA will pay first: If you keep COBRA and sign up for Medicare, Medicare usually becomes your primary coverage. That means Medicare, not COBRA, pays your medical expenses first. COBRA may pick up some of the remaining costs—or it may pay none at all. If you don’t have Medicare in place, you could end up with denied claims and have to pay much more out of pocket than you had anticipated.
Since it covers the bulk of health care costs, Medicare is typically the better long-term coverage for people 65 and older. COBRA premiums are high, and may offer limited value for the cost compared to supplemental coverage options like Medigap.
Retaining COBRA coverage can make sense in certain situations; for example, your employer is covering some or all of your COBRA premiums. Or maybe you still need to continue health coverage for your younger spouse and dependents. In that case, your spouse and dependents can stay on COBRA, even if you enroll in Medicare.
3. Waiting for COBRA to end before using the eight‑month Special Enrollment Period: Many older adults believe if they stop working at age 65 or older and elect COBRA, they can wait until that coverage ends before enrolling in Medicare Part B. But the eight-month Special Enrollment Period we mentioned above is tied to the end of active employment or active employer coverage—not the end of COBRA coverage. Since COBRA is not considered active employer coverage, it does not extend your SEP.
If you wait until COBRA runs out, you could miss your Part B enrollment window and be required to wait for the General Enrollment Period. This, as we mentioned, can leave you exposed to high out-of-pocket medical expenses and a late enrollment penalty.
4. Skipping Part D without verifying creditable drug coverage: COBRA prescription drug coverage works a bit differently than your medical (Part B) coverage under Medicare. It may be creditable for Part D, meaning you can delay enrolling in Part D without a penalty. After COBRA coverage ends, you’ll have 63 days to enroll in Part D.
That said, don’t just assume your COBRA drug coverage is sufficient to allow you to delay Part D.
It’s very important to check with your plan to verify whether your prescription drug coverage is considered creditable. If it’s not, Medicare treats you as though you don’t have adequate drug coverage, which means you’ll need to enroll in Part D when you’re first eligible to avoid a late enrollment penalty.
The Part D penalty is a surcharge added to your monthly premium. It’s calculated as 1% of the national base beneficiary premium ($38.99 in 2026) for each month you didn’t have creditable drug coverage, then rounded to the nearest 10 cents. In most cases, the Part D penalty lasts for as long as you have Part D, even if you switch plans.
The bottom line is if you're retiring or leaving your job past age 65, COBRA does not count as creditable coverage and cannot take the place of Medicare. So you want to make sure you enroll in Medicare on time to avoid unnecessary extra expenses and a whole lot of headaches.
Questions about COBRA and Medicare? Help is available
Understanding how Medicare coordinates with other types of health coverage can be challenging, but you don’t have to do it alone. Reach out to a qualified financial advisor for help—or contact your local State Health Insurance Assistance Program (SHIP).
Available nationwide, SHIPs offer unbiased, one-on-one Medicare counseling to eligible older adults and their families. Counseling is 100% confidential and free of charge. Find out more or find your local SHIP today.
You can also visit NCOA’s Medicare resource library to learn more about enrollment periods, out-of-pocket costs, prescription drug coverage, and Medicare Advantage plans.
