Can you terminate COBRA due to Medicare enrollment?

When any qualified beneficiary (including the covered employee) is entitled to Medicare before electing COBRA, he or she still has the right to elect COBRA coverage as long as he/she has had a COBRA triggering event (e.g., termination of employment that causes a loss of coverage). The COBRA offer cannot be withheld because of Medicare entitlement. And group plan coverage cannot be terminated early because of the Medicare entitlement.

When a covered employee's qualifying event (i.e., termination of employment or reduction of hours that actually causes a loss in coverage) occurs within the 18-month period after the employee becomes entitled to Medicare, the employee's spouse and dependent children (but not the employee) become entitled to COBRA coverage for a maximum period that ends 36 months after the covered employee becomes entitled to Medicare. The covered employee remains entitled to a basic maximum period that ends 18 months after the termination of employment or reduction of hours.

In contrast, when any qualified beneficiary (including the covered employee) first becomes entitled to Medicare after electing COBRA coverage, his or her COBRA coverage can be terminated early (i.e., before the end of the maximum coverage period) and a Notice of Early Termination of COBRA Coverage must be provided to the qualified beneficiary. This rule does not, however, affect the COBRA rights of other qualified beneficiaries in a family unit who are not entitled to Medicare (such as a spouse or dependent children of a Medicare-entitled former employee).

For example, if an employee goes on Medicare after retiring or terminating employment, the spouse would be entitled to 18 months of COBRA. However, if the employee enrolls prior to retiring or terminating employment, then the employee’s spouse becomes entitled to COBRA for a maximum period of 36 months from the date the employee became entitled to Medicare.

Therefore, when an individual enrolls on Medicare matters for purposes of COBRA continuation, as well as the duration of the COBRA maximum period for the spouse/dependents.