Losing Your Job After 65: Medicare Options

Losing your job when you are 65 or older can feel overwhelming, especially when you’re navigating the world of Medicare for the first time. You might be wondering how to avoid gaps in your health coverage and what steps you need to take right away. The good news is that Medicare has built-in protections specifically for situations like yours, and you have more time and options than you might think.

While the Medicare system can seem complex at first glance, understanding your rights during this transition can save you both money and stress. If you’ve been laid off, there are specific enrollment periods and strategies designed to help you move into Medicare coverage.

Understanding Your Medicare Eligibility and Timeline

If you’re 65 or older or fit the eligibility criteria for disability, you likely signed up for Medicare Part A (hospital coverage), but you probably didn’t sign up for Medicare Part B (medical coverage) because you were still working. Those who don’t retire at 65 and are still on their employer-provided insurance may get conflicting information about when they can enroll in Medicare. This can be even more stressful after an unforeseen termination of employment.

The good news: You have options. When you lose your employer coverage, you have the option of extending that coverage with COBRA (see below) or to immediately sign up for Medicare Advantage—Parts A, B and C—and Part D for prescription coverage. Both have their own benefits, but COBRA is more expensive than Medicare. If you have a spouse who’s under 65 or are the insurance holder for dependents, you may choose to stay on COBRA until you’ve found marketplace insurance plans to suit your family’s needs.

COBRA coverage

COBRA—Consolidated Omnibus Budget Reconciliation Act—coverage comes from a federal law that allows you to keep your employer group health plan coverage after termination. While COBRA is a federal law, each state has different policies. In Texas, COBRA coverage lasts up to 18 months and can be extended to 36 months in some cases. COBRA is limited to the exact plan—including medical, vision and dental coverage—that you had while employed.

You have eight months to sign up for Medicare Part B after losing your employer coverage before incurring a penalty, so signing up sooner rather than later is best. If you miss the eight-month window or your Special Enrollment Period, you will have to sign up between January 1 and March 31 and may be required to pay a lifetime late enrollment fee.

You may end up having COBRA coverage and Medicare coverage at the same time. Medicare plans cover more, usually at better prices, compared to COBRA in most cases. COBRA may also not cover things that Medicare does. When weighing whether or not you should keep COBRA or enroll solely in Medicare when eligible, it’s essential to understand your Medicare options, like whether or not you want to sign up for Original Medicare (Parts A and B) or Medicare Advantage (Parts A, B and C).

Medicare Advantage Special Enrollment Period

When you lose your employer-provided insurance and are 65 years or older, you have a short window to enroll in Medicare Advantage. According to the Centers for Medicare and Medicaid Services, there is an eight-month window after losing your job or COBRA coverage when you are eligible to enroll. This Special Enrollment Period begins when you lose your job or coverage, whichever comes first.  If you are enrolled in COBRA, you will need to register for Medicare as soon as you are eligible. Note that you must have Medicare Parts A and B to enroll in a Medicare Advantage Plan.

Medicare Coverage for Spouses or Dependents

Some people who lose their jobs may also be the primary holders of insurance in their families. You may have a spouse on your plan, or other dependents like a child younger than 26 or, in some cases, grandchildren. A common question is whether Medicare will allow you to list your family on your insurance, like you can with an employer group health plan. Unfortunately, the answer to that question is no.

Medicare is a personal plan made for one person. There’s no way to list a dependent; however, your dependents can remain on COBRA if you keep your COBRA coverage when signing up for Medicare. COBRA gives you 18 months to find a new plan for your spouse, children or grandchildren who need coverage.

One option is for your spouse who’s under 65 to sign up for a commercial or marketplace plan. If you have young children who need to be on an adult’s plan, your spouse can sign up for a family marketplace plan. If you don’t, an individual marketplace plan would be a strong option. Marketplace plans are comparable to employer group health plans, and some may even have low premiums for eligible individuals. Spouses who are over 65 are also eligible for the same two Special Enrollment Periods as the individual who lost their job.

You may feel a lot of uncertainty when you lose your job and health insurance, but we are here to help. If you are 65 years or older and eligible for Medicare, a Baylor Scott & White Health Plan licensed insurance agent can provide a consultation on your options and guidance on finding a plan that’s best for you or your loved ones.