This is the first article in a new series I am calling Healthcare in Retirement, and I intend to keep it going for as long as there are tricky corners in Medicare, which is to say indefinitely. One real situation per article. What the rule actually says, what it costs when you get it wrong, and what a Certified Medicare Planner® does about it that most people never think to do.
One thing before we start. I am not an advisor. I am an engineer. So what you get from me is the numbers, laid out the way I had to lay them out to understand them myself, with my work shown. The advisors at American Retirement Advisors are the ones who apply this to your life. I am just the guy at the whiteboard.
The situation
You leave work at 66. Maybe you retired, maybe the role went away. On the way out, the company does something that feels generous: it offers you COBRA, which lets you keep the same health plan for up to 18 months, sometimes longer. You take it. Why would you not? Same doctors, same cards, no new decisions.
Here is the part nobody in the exit meeting mentions. A completely separate clock started the month you walked out, and COBRA does not touch it.
Rule one: Medicare does not count COBRA as job coverage
If you are 65 or older and you had coverage through a job, Medicare gives you a Special Enrollment Period to sign up for Part B without a penalty. It runs for 8 months, and it starts the month after your employment ends or the month after your group coverage ends, whichever comes first. Medicare's own words on COBRA: "COBRA isn't considered group health plan coverage. Getting COBRA doesn't change when this Special Enrollment Period ends." And when your COBRA runs out, that is not a qualifying event. It does not open a new window.
So with 18 months of COBRA, the Part B window closes at month 8. Ten months before COBRA does. Most people find out at month 18.
Rule two: the penalty is forever
Miss the window and you wait for the General Enrollment Period, January through March, with coverage starting the month after you sign up. Then Medicare adds 10 percent to your Part B premium for every full 12 months you could have had Part B and did not, for as long as you have Part B.
The 2026 standard Part B premium is $202.90 a month. Ten percent is $20.29. That does not sound like much until you multiply it by every month for the rest of your life, and until you add the months in between with no Part B at all, when a hospital bill is entirely yours. We told the story of one woman this happened to in August, two years of COBRA left, two months of Medicare left. It is not rare. Our advisors hear a version of it every season.
Rule three: COBRA usually costs more than Medicare anyway
This is the part that surprised me. COBRA is not subsidized. Under federal rules the plan can charge you up to 102 percent of the full cost, the part you used to pay plus the part your employer used to pay, plus a two percent fee. The average employer plan in 2025 cost $9,325 a year for one person and $26,993 for a family, according to KFF. At 102 percent, that is about $793 a month for one person on COBRA.
Now the other column. Part B at $202.90. A Medicare Supplement Plan G, which in Maricopa County this year is sold by 32 companies at prices from about $131 to $526 a month for a 65-year-old. A drug plan, and Arizona has stand-alone drug plans starting at $0. Call it $335 to $730 a month, all in, with far less exposure to a bad year than the average employer plan carries. For the person who is 65 or older, the generous COBRA offer is very often the expensive option.
Where COBRA earns its keep is the spouse who is not 65 yet. That is tomorrow's article, and the math on that one surprised me even more.
No, you do not get to keep both
Some people figure they will have it both ways. Keep COBRA, add Medicare, belt and suspenders. That is not how it works.
If you elect COBRA and then sign up for Medicare, the plan is allowed to end your COBRA coverage. Medicare's own guidance says COBRA "will probably end once you sign up." If you already had Medicare when you elected COBRA, you can technically hold both, but Medicare pays first and COBRA pays second, which means you are paying full freight for a plan that only picks up what Medicare leaves behind, which a supplement would do for a fraction of the price.
And then there is real life. Good luck getting your doctor's office to bill the right one first. Good luck convincing one insurer that the other one should not have paid. One of our advisors spent months untangling a client's claims that kept getting denied because the system still listed an old employer plan as the other payer. Nobody was cheating anybody. It was just two payers and one bill, and the bill lost.
What a Certified Medicare Planner® does differently
They ask about COBRA before you sign the election, not after. They put both clocks on one page, the COBRA months and the 8-month Part B window, so you can see where they cross. They price both columns with your actual numbers instead of the averages I used above. They catch the detail that trips up even careful people: COBRA does not count as creditable coverage for Part B, but its drug coverage often does count for Part D, so one clock is running and the other is not. And they help you file the form that proves your work coverage so your Part B start date is clean and the penalty never comes up.
That is an hour of work. The penalty is a lifetime. The advisors who do this all day are at 602-281-3898, and I would call before you sign anything on the way out the door.
If you want the whole picture in one sitting, we are teaching it in public next month.
Friday, October 2. Foothills Library, Glendale, 10:30 AM. Mustang Library, Scottsdale, 2:30 PM. No cost. Register at 123easymedicare.com/medicare-workshop or call (877) 220-1089.
Next in Healthcare in Retirement: you are 65 and still working, your spouse is 63, and the family plan at work is starting to look expensive. Do you split up? The arithmetic, with IRMAA and the HSA rule nobody warns you about.
This event is presented by 123EasyMedicare, a brand of American Retirement Advisors, an independent, private organization. It is not sponsored by, endorsed by, or affiliated with Medicare, the Centers for Medicare & Medicaid Services, the Social Security Administration, or any government agency. The libraries are not sponsors of, and are not affiliated with, this event. Educational only; not tax, legal, or insurance advice.
Disclaimer: This article is for educational purposes only. It is not sponsored, endorsed, or otherwise representative of Medicare or the federal Medicare program. American Retirement Advisors is not a government agency. For official Medicare information, visit medicare.gov or call 1-800-MEDICARE (1-800-633-4227).