Why COBRA Isn’t Creditable Coverage, and the Part B Risk
COBRA and Medicare run on two different clocks: 8 months to add Part B, 18 months of
COBRA. The gap between them is where the penalty risk lives.
In This Article
No — COBRA does not count as creditable coverage for Medicare Part B. Only a plan tied to current employment lets you delay Part B without a lifetime penalty.
The trap: COBRA is usually the identical plan. The rule does not care.
Where you sit on the calendar decides what happens next:
- Still working and covered at work — your clock has not started.
- Job ended within 8 months — your window is open now.
- Job ended over 8 months ago — read the penalty math, then call SHIP.
The 10% penalty is permanent once it attaches, and it rides on the Part B premium — one of the five separate bills Medicare sends. It does not attach in every case.
ℹ️ Financial Disclaimer: Financial education only, not personalized advice on insurance, tax, credit, or retirement income. Consult a State Health Insurance Assistance Program (SHIP) counselor, a CPA, or a fiduciary advisor before acting.
Why identical coverage stops counting the day you leave
Medicare applies creditable coverage to two separate tests. Collapsing them is where the money goes.
What the term means for Part B
Only a group health plan based on current employment lets you delay. Social Security states COBRA, retiree, VA and Marketplace coverage do not count.
The words that matter: current employment status
Regulation 42 CFR 406.24 turns on employment status, not plan quality. Your Special Enrollment Period protection ends with the job, not the plan.
Employer size is a separate test: coverage from an employer with 20 or more employees protects timing while you work. When to sign up for Medicare covers the base timeline.
🔍 How It Works: An active employee’s plan pays before Medicare. A former employee’s plan pays after — so Medicare expects you enrolled.
What the Part B penalty costs at 2026 rates
The late enrollment penalty adds 10% to your premium for each full 12-month period you could have enrolled but did not.
The formula, in one line
Standard premium, plus 10% per full year of delay, for life.
| Full years without Part B | Penalty | Added to 2026 premium | Key detail |
|---|---|---|---|
| Under 1 year | 0% | $0 | Only full years count |
| 1 year | 10% | $20.29/month | Reset each January |
| 2 years | 20% | $40.58/month | Lasts while you hold Part B |
| 5 years | 50% | $101.45/month | Percentage fixed, dollars rise |
Penalty rule: Social Security POMS HI 01001.010. Dollars calculated on the 2026 standard premium.
Why the number moves every January
The percentage is fixed; the premium it multiplies usually rises. See how the Part B penalty is calculated and the 2026 standard Part B premium.
📊 Data Point: Standard monthly Part B premium, $202.90 in 2026, up from $185.00 — Source: CMS, 2026 Parts A & B Premiums fact sheet, November 14, 2025.
The two clocks: 8 months of Medicare, 18 months of COBRA
Your window runs 8 months from the month after your job or group coverage ends, whichever comes first. Not when COBRA ends.
When the window opens
It opens whether or not you elect COBRA. Continuation coverage cannot pause or restart it.
A worked timeline
Say your last day of work is March 31.
- April 1 — your 8-month window opens.
- November 30 — it closes. COBRA still has ten months to run.
- September 30, next year — COBRA is exhausted. The window shut ten months ago.
- January to March after that — the General Enrollment Period. Coverage starts the month after signup.
That leaves roughly four months uninsured and well over 12 months without Part B. Here, the penalty attaches.
If you already missed it
Since January 2023, coverage begins the month after you enroll rather than the following July — a shorter gap, not no gap.
⚠️ Costly Mistake: Treating COBRA’s 18 months as your Medicare deadline. Part A carries its own, differently calculated penalty if you pay a premium for it.
✅ Action Step: Ask a SHIP counselor: “Based on my last day of work, when did my Part B window close, and what penalty applies now?” Social Security makes the final count.
Part B and Part D follow different rules
Here the answer flips. Prescription drug coverage under COBRA can be creditable, even though the medical coverage never is.
When COBRA drug coverage counts
If it qualifies, you get a Special Enrollment Period when COBRA ends — protection Part B never offers. Only your plan’s written notice settles it.
The Part D penalty is 1% of the national base beneficiary premium, $38.99 in 2026, per uncovered month after 63 days without creditable coverage. See how the Part D penalty is calculated.
Who pays first
Medicare generally pays first, COBRA second. Medicare warns that if you are eligible but not enrolled, COBRA may cover only a small portion of your care.
💡 Expert Note: A common point of confusion is assuming a full premium buys full benefits. A qualified beneficiary who is eligible but unenrolled can pay 102% of the group rate for secondary-only coverage.
What to do, depending on where you are
Your last day of employment, not your COBRA end date, decides which path applies.
Ended less than 8 months ago
You can enroll in Part B now, any time of year, penalty-free. Social Security needs Form CMS-40B from you and Form CMS-L564 from your employer — request it early.
Ended more than 8 months ago
Your next opening is January 1 to March 31. Confirm your dates first, since the count runs in full 12-month periods and shorter gaps may carry nothing.
What happens to your COBRA
It will probably end, since a plan may terminate coverage once you become entitled to Medicare after electing COBRA.
Other decisions share this calendar, including what to do with a 401(k) after leaving a job. Since Part B is deducted from your benefit, estimate your monthly Social Security payment before fixing a date.
Three expensive assumptions
That HR would have told you
Benefits teams administer COBRA. Medicare timing sits outside that role, and the notices mentioning it are easy to miss.
That you can keep funding an HSA
Once any part of Medicare begins, your HSA contribution limit is zero. Apply more than six months after turning 65 and Part A backdates six months, turning past contributions into excess carrying a 6% excise tax — see IRS Publication 969 and the tax rules that make an HSA worth protecting.
That COBRA still pays what it did
The premium held or rose. What the plan pays may have changed the day you became Medicare-eligible.
✅ Action Step: If you funded an HSA during months Part A later covered, ask a CPA: “How do I remove the excess and its earnings before the filing deadline?”
Common questions about COBRA and Medicare
1.Does COBRA count as creditable coverage for Medicare?
Not for Part B. Only current-employment coverage delays Part B penalty-free, though COBRA drug coverage may count for Part D. Confirm your dates with a counselor.
2. How much is the Part B late enrollment penalty in 2026?
Ten percent of the $202.90 standard premium, roughly $20.29 monthly, per full 12-month period delayed. A counselor can confirm your count.
3. When does my 8-month Special Enrollment Period start?
The month after your employment or group coverage ends, whichever comes first. Electing COBRA does not change that date.
4. Is COBRA creditable coverage for Medicare Part D?
It can be, if the drug coverage meets Medicare’s standard. Only your plan’s written notice confirms it, so request that notice.
5. Does COBRA end when I enroll in Medicare?
Usually. A plan may end continuation coverage once you become entitled to Medicare after electing COBRA, and must notify you.
6. Who pays first, Medicare or COBRA?
Medicare generally pays first and COBRA second once you are eligible, which is why enrolling on time protects what COBRA covers.
8. What happens if I miss the 8-month window?
You wait for the General Enrollment Period, January 1 to March 31, with coverage starting the month after signup.
9. Is the Part B late enrollment penalty permanent?
Yes. It stays as long as you hold Part B, recalculated yearly against the current standard premium.
10. Can I contribute to an HSA while on COBRA at 65?
Only until any part of Medicare begins, and backdated Part A can end eligibility retroactively. Ask a CPA before contributing.
11. How long does COBRA coverage last?
Generally 18 months, extending to 29 with a disability determination or 36 after events such as divorce.
12. Can the Part B late enrollment penalty be appealed?
You may request reconsideration if the count is wrong, or equitable relief if a federal employee misinformed you.
Your next step
Find your last day of employment and count forward eight months. If that date has passed or is close, call a SHIP counselor before your next COBRA payment.
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