Medicare and COBRA: Why Delaying Part B Could Be a Costly Mistake

Too many people think they’re being wise by staying with COBRA when they leave their work, but then they incur huge fees and a lifetime Medicare penalty afterward. This mistake can cost you thousands of dollars whether you’re in your early 60s, newly retired, or just starting to use Medicare for the first time. And the worst part? Most people don’t know they’ve done anything wrong until it’s too late.

Let’s make this clear and simple.

You might think that COBRA is legitimate health insurance. Yes, it does. But Medicare doesn’t see it that way. COBRA doesn’t count as current workplace coverage until you’re eligible for Medicare, which is usually at age 65. This is important because if you wait to sign up for Medicare Part B because you think COBRA would cover you, Medicare can subsequently deny claims and charge you a 10% penalty for every 12-month period you delayed.

I’ve read the government websites, the legal briefs, and a hundred Reddit discussions that are full of panic. There is chaos all around. HR departments make mistakes too. But once you see it, the rule is easy:

COBRA is not a good way to put things off.

I’ll show you why that is in this guide, using actual data, genuine experiences, and a clear plan you can follow. Because you deserve more than just some general counsel. You need answers that will really keep you safe.

Before we go any further, have you already reached 65 and kept COBRA instead of signing up for Part B? Or are you getting close to retirement?
Please tell me what’s going on in the comments. Your inquiry could help someone else not make a big mistake.

Why So Many People Get This Wrong

You’re not the only one who has been perplexed about how COBRA and Medicare work together. This isn’t just a one-time problem; it’s a common misunderstanding. The major reason is simple: at first glance, COBRA seems like good health insurance.

You pay rates and get coverage, and everything seems normal. People think they can stay on COBRA after they turn 65 and put off signing up for Medicare Part B to save money. Some HR staff, benefit coordinators, and insurance brokers deliver advice that sounds good but is actually inaccurate.

Medicare has its own rules, and that’s the truth. And they don’t always work the same way as COBRA does.

The biggest error? Thinking that COBRA is “creditable coverage” for Medicare Part B. It doesn’t. If you’re still working or insured by a spouse who is, Medicare will only provide you a Special Enrollment Period (SEP). COBRA doesn’t count because it starts after you leave your employment. That’s where people get stuck.

I’ve seen retirees wait six months, a year, or even two years on COBRA, thinking they were covered, only to find out they can’t get Medicare until the next General Enrollment Period. That delay doesn’t only mean fines. It might also mean being without insurance for months.

Delaying Part B because of COBRA isn’t the only costly misstep — we’ve broken down the Top 5 Medicare Mistakes that can ruin your retirement planning.

This isn’t a small thing. There are real-world effects of this rule.

Why this is important: If you depend on your employer, HR, or insurance broker to help you, you could be putting yourself in a bad financial situation. And the worst part is that you won’t know until the bills come or the claim is turned down.

The Harsh Truth: COBRA Isn’t the Same as Employer Coverage

Let’s get rid of the greatest misconception right away: when it comes to Medicare requirements, COBRA is not the same as workplace coverage. And no, it doesn’t matter that your old employer offers it or that it looks and feels like your old insurance. Medicare views it differently, and that counts.

Medicare is your main health insurance company after you turn 65. If you have COBRA and haven’t signed up for Medicare Part B yet, your COBRA plan can lawfully refuse to pay for a lot of services. This isn’t a mistake; it’s the law.

Medicare can also deny your claims because you never officially signed up. That leaves you in the middle with no one to pay the expenses.

The Social Security Administration says this directly: COBRA does not considered as current job coverage, and when it ends, you are not eligible for a Special Enrollment Period (SEP). So, if you wait to sign up for Part B until COBRA runs out, you’ll probably have to pay a permanent late enrollment fee and wait months for your coverage to start.

And don’t think your COBRA plan will let you know. Most people won’t.

Why this is important: Because this is where people get lost. They think they are covered, but they aren’t. This is not a gray area. It’s a clear rule that keeps getting ignored, even by people who should know better.

If you’re not sure if your coverage is good enough, don’t guess. If you make a mistake here, you could end up with thousands of dollars in medical debt and higher Medicare payments for the rest of your life.

The Cost of Getting It Wrong: Penalties, Delays, and Denied Claims

Let’s get down to business and talk numbers. If you wait until age 65 to get Medicare Part B and rely on COBRA, it will have substantial, long-term effects on your finances.

1. The Lifetime Penalty

This is how the Medicare Part B penalty works:

Medicare will charge you a 10% penalty for each complete 12-month period you wait to sign up for Part B if you don’t qualify for a Special Enrollment Period. And that fine doesn’t go away. As long as you have Part B, which is most of the time the rest of your life, it stays.

For example, if you waited two full years, your monthly premium may go up by 20% for the rest of your life. The standard premium is $174.70 a month as of 2025. That goes up to about $209 a month with a 20% penalty. You could end up paying thousands of dollars more over the next 10 to 15 years.

2. The Coverage Gap That No One Tells You About

If you keep on COBRA until it finishes 18 months after you leave your job, you can then apply for Medicare. The problem is that if you don’t have a valid SEP, you’ll have to wait until the following General Enrollment Period (January to March), and your coverage won’t start until July.

That makes a dangerous hole.
You won’t have any main insurance for months, and you’ll have to pay for any medical bills during that period.

Yes, there were times when people were hospitalized at that time and came out with tens of thousands of dollars in debt.

3. Claims that were turned down and bills that came out of nowhere

If you’re over 65 and haven’t signed up for Medicare yet, your insurance company might deny claims even if you’re still on COBRA. Why? Medicare is expected to be your main source of payment after age 65. If you haven’t joined up, COBRA isn’t important anymore.

This has taken place. A woman in California ended up owing more than $25,000 because her insurance company wouldn’t pay for her cancer treatment. This was because she hadn’t signed up for Part B.

Why this is important: Because sanctions are only one part of the problem. The bigger risk is thinking you’re safe when you’re not and only finding out after the damage is done. This part isn’t designed to scare you; it’s meant to make things clear so you can do something before it’s too late.

Once you’re finally enrolled, don’t stop there — most seniors miss out on key benefits. Here’s Are You Using All Your Medicare Preventive Services? that shows what you might be skipping.

Why Most Online Advice Fails You

Let’s be honest: if you search for “Medicare and COBRA” on Google, you’ll get a lot of official-looking information on government pages, insurance blogs, and HR portals. But if you look closely, you’ll see the same pattern.

Either they are:

• Not clear enough (“Make sure to sign up on time!”)
• Too technical (full of policy jargon)
• Or just plain wrong (“COBRA is an option after 65” without saying anything about Medicare restrictions)

Some of the best publications don’t get the point: they talk about COBRA and Medicare next to each other without ever plainly declaring, “If you’re 65 or older, COBRA is not a safe substitute for Part B.”

That’s not a tiny mistake; it’s the reason people get hurt.

I looked at more than a dozen of the best findings for this article. A lot of people use the phrase “creditable coverage,” but very few clarify that COBRA doesn’t meet that requirement for delaying Part B. And even fewer tell you what will happen if you make the wrong call, in terms of money, emotions, and logistics.

What’s not there?

• This is how Medicare sees COBRA in plain English.
• What happens if you wait to do Part B step by step
• Examples from real life of what happens if you do this wrong
• A clear plan of action depending on your age and job situation

This guide is here to fill that gap.

Why this is important: If you read half-true information, you’re more likely to make a completely erroneous choice. And when it comes to Medicare, making the wrong choice might cost more than simply money. They cost you peace of mind. You deserve straightforward, human-first answers that take into account how hard and emotional this change is.

What You Should Do Now (Whether You’ve Delayed or You’re Just Planning Ahead)

If you’re already on COBRA, just turned 65, or are helping a parent figure things out, here’s what you need to do immediately.

I divided it into two clear paths based on where you are.

1. If You’re Already Over 65 and on COBRA but Haven’t Signed Up for Part B

You have to move quickly. What to do is:

• Call Social Security right away to find out if you are still in a Special Enrollment Period (SEP). You might still be able to get it if you quit your work recently, but the SEP only lasts for 8 months after your job-based insurance stops.
• Get your application for Medicare Part B in as soon as possible. Don’t let COBRA run out. The longer you wait, the bigger the fine and the greater the gap in coverage.
• Call your COBRA administrator. Find out how your plan works with Medicare after you turn 65. Put everything in writing.
• Get ready for possible coverage that goes back in time. If Medicare agrees, it could aid you with refused COBRA claims, but you’ll probably have to pay back premiums.
• If you need it, get aid with the law or money. If you already have unpaid medical bills, you might want to talk to a lawyer who knows a lot about Medicare or a SHIP counselor in your state.

2. If you’re getting close to 65 and still working (or will soon retire)

Here’s your plan:

• When you turn 65, sign up for Medicare Part A. Most individuals can get it for free, and it works with your current insurance.
• Check to see if your employer’s health insurance is “creditable.” You can put off Part B without penalty if you or your spouse are still working.
• Don’t count on COBRA after you retire. COBRA no longer protects you from Medicare penalties once you stop working. Sign up for Part B before your job-based insurance finishes or as soon as it does.
• Write everything down. Keep track of when you applied for coverage and when it finishes. You could need proof later, so don’t worry about making mistakes.
• Apply early if you’re not sure. Having overlap is safer than having a gap.

Why this is important: Most individuals don’t know how little time they have to rectify something after they make a mistake. The most important thing is to act quickly, no matter if you’re ahead of the situation or already in it. Medicare doesn’t let you sign up late, and the system won’t let you know if you make a mistake. You have to make the first move.

If you’re confused about when exactly to enroll, check out our Seniors Guide to Medicare Enrollment Deadlines — it breaks down every timeline you need to know.

You Only Get One Shot at Getting This Right

Medicare doesn’t send out warning letters, though. COBRA won’t stop you from making a mistake. And by the time you figure out something is wrong, you’re generally deep in penalties, claim denials, or months without coverage.

It’s not about being afraid. It’s important to know what’s going on when the system is often confusing.

You care more than most people if you’ve read this far. That provides you an advantage.

But don’t just close this tab and go. Check your enrollment status again. Check the date your COBRA ends. And if you’re helping someone else get through this, send them this guide. These are the kinds of blunders that don’t seem like a big deal now, but you’ll be pleased you got them right in the future.

Before you leave…

• Have you or someone you know had to deal with this COBRA-Medicare mess?
• Did the punishments surprise you?
• Did your boss or benefits department provide you clear advice?
• What would you tell someone who is about to turn 65?

Please tell us about your experience below. Someone else is undoubtedly going through the same thing, and your advice could help them from making a big mistake.

Need Personalized Medicare Help?

At FameTribute.com, we break down complex health and retirement decisions into simple, actionable steps. If you’re unsure about your Medicare timing, COBRA rules, or want to avoid costly mistakes—don’t wait.

Visit FameTribute.com to get clear, expert-backed advice tailored to your situation.

We’re not just another blog—we’re your second opinion before you make a life-impacting choice.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or medical advice. Always consult with a licensed Medicare advisor or Social Security representative for guidance specific to your situation.