COBRA and Medicare — the trap people miss

This is the single most expensive mistake people make as they cross 65: assuming COBRA “counts” for Medicare purposes. It does not. If you're on COBRA past 65 and haven't enrolled in Medicare, the penalty clock is already running.

The bottom line

COBRA does notqualify as creditable employer coverage for Medicare Special Enrollment Period purposes. If you don't enroll in Part B within 8 months of your job ending (not when COBRA ends), you may face a permanent Part B late-enrollment penalty: +10% of your premium for every 12 months you went without it, for the rest of your life.

Why this happens

COBRA looks like employer coverage — same benefits, same carrier, same network. So people assume the rules treat it the same. But Medicare's SEP rules are based on active employment with current employer-sponsored coverage. The moment you leave the job, the SEP clock starts, regardless of whether you elected COBRA.

Your options if you're close to 65 and COBRA-eligible

1
Most cases: Enroll in Medicare Part A and Part B
If you're leaving a job at or after 65, sign up for Medicare immediately. Part A is usually free; Part B is ~$206.50/mo in 2026. Then decide between Original Medicare + Medigap + Part D, or a Medicare Advantage plan.
2
Drop or skip COBRA in most cases
If you have Medicare, COBRA usually becomes secondary insurance — meaning Medicare pays first and COBRA pays a smaller share. You're paying full COBRA premium for coverage that's now a backup. Most people drop COBRA once Medicare kicks in.
3
Special case: HSA-eligible coverage
If your COBRA plan is a high-deductible health plan (HDHP) and you want to keep contributing to an HSA, enrolling in Medicare disqualifies HSA contributions. Talk to a benefits advisor before deciding.
4
If you missed your SEP
You can sign up during the General Enrollment Period (Jan 1 – Mar 31) every year, but the late-enrollment penalty applies. Coverage starts the month after enrollment. You may want to talk to SHIP first.

The exception: small employers

If your employer had fewer than 20 employees, Medicare is actually primaryat 65 even if you stay on the employer plan. Don't skip Part B in that case — the employer plan won't cover what Medicare would have. This is one of the worst-case versions of the COBRA trap because people assume the small-employer plan is doing more than it is.

Already on COBRA past 65 without Medicare?

1
Check the SEP window
Calculate 8 months from your last day of active employment (not COBRA end date). If you're still inside, sign up at SSA immediately — no penalty.
2
Outside the SEP — file an equitable relief request
SSA has discretion to grant a Medicare enrollment with no penalty if you can show you got bad advice from a government source (e.g., the Marketplace told you COBRA counted). Document everything. Call SSA at 1-800-772-1213.
3
Last resort — enroll during the next GEP
January 1 – March 31, with the penalty applying. Better than going uncovered into a hospital stay where Original Medicare would have covered $60,000+ in costs.

Wisconsin SHIP counselors specialize in untangling this situation. Free, no commission, no upsell. Call 1-800-242-1060.

Not yet on COBRA? Plan ahead.

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