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Rep. Kurt Schrader, D-Ore. (Photo: Schrader)

Life Health > Health Insurance > Medicare Planning

House Member Revives Bill to Fix COBRA-to-Medicare Enrollment Glitch

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What You Need to Know

  • Under current rules, clients who are victims of the COBRA enrollment glitch could face Medicare Part B late-enrollment penalties for the rest of their lives.
  • Affected clients may also face a 15-month gap in Medicare physician and outpatient services coverage.
  • H.R. 8791 is the new version of a bill Schrader has been introducing since 2009.

Rep. Kurt Schrader has brought back a bill that could save some older clients from as much as 15 months without Medicare coverage for physician and outpatient services.

The Oregon Democrat reintroduced the Medicare Enrollment Protection Act bill, which would fix a glitch that hurts workers ages 65 and older who leave their jobs, pay for COBRA group health insurance continuation coverage, use up their COBRA coverage, and then sign up for Medicare Part B.

The glitch can lead to high premium bills and long periods when affected clients may have enormous holes in their health coverage.

The new bill, H.R. 8791, is the latest version of a stand-alone bill Schrader has introduced in nearly every previous Congress since 2009. The text has also appeared in the Seniors’ Health Care Choice Act bills, which were introduced in 2017 and 2019 by Rep. Lloyd Smucker, R-Pa.

What It Means

The House is considering a bill that could help some clients overcome terrible Medicare enrollment periods.

But lawmakers have been missing opportunities to pass similar bills for more than a decade.

Medicare and COBRA

Most people qualify for Medicare coverage when they turn 65.

Typical workers and spouses get “free” Medicare Part A hospitalization coverage because they and their employers have paid for the coverage through payroll tax payments.

Workers and spouses must pay a monthly premium for Medicare Part B physician and outpatient services coverage. If they are still working and already have employer-sponsored group coverage, they may choose to stay in the employer’s plan.

If the employers let workers go, or workers leave their jobs, the workers may choose to keep their employer coverage and current health care provider relationships in place by paying to continue their employer coverage under the continuation rules set by the Consolidated Omnibus Budget Reconciliation Act of 1986, or COBRA.

The Problem

Because paying for Medicare Part B coverage is voluntary, Congress has included late-enrollment penalties in an effort to keep relatively young, healthy people ages 65 and older from waiting until they have serious health problems to pay their premiums.

Normally, older people who become eligible for Medicare Part B coverage have an eight-month grace period they can use to move into Part B coverage soon after they become eligible.

Older workers who exhaust COBRA benefits do not qualify for a Part B special enrollment period. They must sign up for Medicare Part B coverage during an open enrollment period that lasts from Jan. 1 through March 31, with new coverage taking effect July 1.

The open enrollment period and coverage start date delay rules can be especially hard on workers who fall into the COBRA-to-Medicare Part B trap in April — just after the end of the open enrollment period.

Under current rules, clients who end up in the trap must pay Medicare Part B late-enrollment penalties for the rest of their lives.

More important, because of the enrollment period rules, if they trip the trap today — in September — they will go without physician and outpatient services coverage for about nine months.

If they trip the trap in April 2023, they might have to go without outpatient and physician services coverage until July 2024.

The Legislative Climate

Schrader has had both Republicans and Democrats on his COBRA-to-Medicare enrollment bill co-sponsor lists since 2011.

The current co-sponsor list includes two Democrats — Mikie Sherrill of New Jersey and Mike Thompson of California. The three Republicans on the list are Smucker, Gus Bilirakis of Florida and Tim Walberg of Minnesota.

Schrader has had support for the earlier bills both from consumer groups like AARP and the Medicare Rights Center and from the National Association of Health Underwriters.

Congressional Budget Office analysts predicted implementing the version of the bill introduced in 2019 would cost the federal government $51 million over 10 years.

Pictured: Rep. Kurt Schrader, D-Ore. (Photo: Schrader)