COBRA -- the Consolidated Omnibus Budget Reconciliation Act -- requires most employers with group health insurance to make continuing coverage available to former employees who meet certain requirements. To be eligible for COBRA, you must have coverage under an employer's plan before leaving, and you must leave because of a qualifying event. Retirement is one such qualifying event.
Qualifying in Retirement
If you wish to continue your insurance coverage through COBRA, any reason for leaving work except gross misconduct is a qualifying event. If you retired with a satisfactory work record, you're eligible for COBRA. If you were fired for gross misconduct, however, you aren't eligible even if you consider yourself retired because you're not looking for work. Even if you're collecting retirement benefits, gross misconduct disqualifies you.
Getting COBRA With Medicare
If you already have Medicare before you retire, you can also obtain COBRA coverage if you otherwise qualify. It doesn't work the other way around. If you go on COBRA first and then enroll in Medicare, your employer may terminate your COBRA. With rare exceptions, if you have both Medicare and COBRA, Medicare pays first. This means that Medicare is the primary insurance.
Timing the Transition
Within 30 days of your retirement date, your employer must notify you whether you're eligible for COBRA. You have 60 days to sign up. This period begins with the day the notice is sent or the last day of your employee coverage, whichever comes later. If you miss the deadline, you'll lose your chance for COBRA in retirement.
Paying for Coverage
Before retirement, your employer may have paid part of your insurance premium. During retirement, your employer can require you to pay the entire cost of COBRA plus 2 percent in fees, for a total of 102 percent of the cost. You must make your first payment within 45 days of signing up for COBRA. If this payment is late, you may lose access. Your may also lose coverage if you don't pay your ongoing premiums on time.
Reaching COBRA Limits
You're eligible for COBRA for a limited time during your retirement. Usually COBRA coverage extends for 18 months, but some plans may continue for 36 months or more, at the discretion of the employer.
- U.S. Department of Labor: COBRA Continuation Health Coverage
- Ogletree Deakins: 10 Common COBRA Screw-Ups – And How You Can Avoid Them
- Medicare Interactive: Am I Eligible for COBRA or Retiree Coverage if I Stop Working and Have Medicare?
- U.S. Department of Labor: FAQ About COBRA
- U.S. Department of Labor: Retirement and Health Care Coverage
- Medicare.gov: COBRA -- 7 Important Facts
- HealthCare.gov: See if You Can Get Coverage
- Medicare.gov: Sign Up/Change Plans
- Medicaid.gov: Find Out if You Qualify