If you are old enough to be eligible for Medicare and leave your job because you are retiring or got laid off, you can keep your previous employer's health benefits with a COBRA extension and delay signing up for Medicare. If you do, take care.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) lets people who have left jobs keep employer-provided health coverage for 18 to 36 months provided they pay up to the employer's full cost plus 2%. Keeping employer coverage with a COBRA extension may seem more attractive or at least more familiar compared to Medicare, the federal health insurance plan for people 65 and older. However, applying for Medicare as soon as you are eligible is likely to be less expensive and help you avoid potentially costly traps.
People don't normally sign up for Medicare Part B coverage while working even after turning 65 and becoming eligible for the federal health plan, explains Ash Toumayants, founder of Strong Tower Associates, a State College, Pa.-based retirement planning firm. Medicare Part A is free of charge to workers who've earned sufficient Social Security credits, while Medicare Part B requires a monthly premium, typically $183 including coinsurance.
"As long as you're working and have insurance through employee, you don't need to get on Medicare Part B," Toumayants says. "You can defer Medicare Part B." If you delay enrolling in Part B when you turn 65, however, you run the risk of permanently raising your Part B premiums. Plus you could find yourself uninsured for a while.