Moving from employer coverage to Medicare or the Marketplace

Leaving employer coverage is the single most common reason people arrive here, and it is a transition with more moving parts than it looks.

First, which destination

Two different routes, decided mostly by age and eligibility.

If you are Medicare-eligible, losing employer coverage generally opens a Special Enrollment Period for Part B and for a drug plan. This is the route where the timing rules are strictest.

If you are not, the Marketplace is usually the destination, and losing job-based coverage is a qualifying event that opens a window there.

A household can need both at once — one spouse to Medicare, one to the Marketplace. That is normal and worth flagging early, because the two have different clocks.

The clock starts at the event

For both routes, the window generally runs from when coverage ends, not from when you started looking.

The sequence that goes wrong is always the same: coverage ends at month end, the person plans to “sort it out shortly”, and a meaningful part of the window is gone before they look properly.

If you know the date in advance — a retirement, a notice period — start four to six weeks before it, not after.

What COBRA does, and does not do

COBRA lets you continue the employer plan for a period, at your own cost.

Three things about it catch people:

It is generally not creditable coverage for delaying Part B. Relying on COBRA to postpone Medicare enrollment is one of the more expensive assumptions in this area. Assume it is not, and check.

Electing it can complicate the alternative. Taking COBRA and then changing your mind part-way through does not reliably re-open the window you passed up. Letting it run out on its own schedule generally does open one; dropping it voluntarily generally does not.

It is a decision with a deadline, made in a period when most people are dealing with other things.

If COBRA is in front of you now, that is worth a phone call before you elect or decline. Us, a Navigator, or 1-800-MEDICARE — all free.

The documentation

Both routes generally want proof that the coverage ended: a termination letter, a certificate of coverage, or a letter from the plan administrator.

Get it at the time. It is easy to obtain in the week you leave and difficult six months later, and coverage approved pending documents can be rescinded if they do not arrive.

The sequence that works

1. Find the end date of the current coverage, precisely.
2. Ask for the termination letter before you leave, not after.
3. Decide the destination — Medicare, Marketplace, or one of each for a couple.
4. Check networks and formularies against your actual doctors and prescriptions.
5. Confirm the new start date in writing before anything is canceled.
6. Only then deal with COBRA or the old plan.

The gap nobody plans for

Even done correctly, there can be a short period between coverage ending and the new plan starting. Ask specifically what your effective date will be — it is a different question from “am I eligible” and the answer changes what you should do about care in the meantime.

If you have a procedure, a prescription refill or an appointment in that window, say so early. Sometimes the effective date can be arranged around it; sometimes it cannot, but knowing beforehand is always better.

Where to get this checked

The distinction the whole thing turns on

There is one idea underneath almost every mistake here, and it is worth isolating.

The protection that lets you delay Medicare without a penalty is tied to coverage from current employment — yours or a spouse’s. That phrase is doing all the work.

COBRA is not current employment coverage. Retiree coverage is not current employment coverage. Severance-funded continuation is not current employment coverage. All three feel like the plan you already had, because they usually are the same plan. None of them reliably protects you from a late-enrollment penalty, and two of them have left people with a gap as well.

If you take one thing from this page: the trigger is the day the employment ends, not the day the coverage ends.

Employer size decides who pays first

The second half of the question is how large the employer is, because a threshold in federal rules determines which plan pays first.

Above it, the group plan is generally primary and Medicare secondary, and delaying Part B is usually safe. Below it, Medicare is generally primary whether or not you enrolled — which means the group plan may pay only what it would have paid after Medicare, and if Medicare is not there, that share is simply yours.

People discover this through a denied claim, months after the decision. Get one sentence in writing from your benefits administrator:

Is this plan primary or secondary to Medicare for an employee aged 65 or over, and what is the employer’s size for that determination?

A verbal answer from a colleague is not this. A written answer from the plan is.

Sequence the pieces in the right order

1. Confirm primary or secondary, in writing. Everything else depends on it.
2. If you contribute to an HSA, set a stop date first. You cannot contribute once enrolled in any part of Medicare, including Part A, and Part A can be backdated when you enroll after 65 — which can turn past contributions into excess ones with tax consequences. Decide this before you decide anything else.
3. Check your spouse’s position. If they are covered through your employment, their protection ends when yours does, and their own clock starts then.
4. Confirm your drug coverage is creditable, and keep the letter. The plan must tell you in writing. That letter is what proves you were covered if a penalty is ever asserted.
5. Plan the Part B start date to overlap, not to follow. Part B start dates are set by rule, not by request, so work backward from the date the group coverage ends.
6. Then choose between Advantage and a Supplement, remembering that the Medigap window is time-limited and does not reopen.

Do not create a gap while you tidy up

The commonest bad outcome is not a penalty. It is a month with nothing.

It happens because the group plan ends on a date set by HR, Part B starts on a date set by rule, and nobody lines them up. Confirm both dates in writing before you resign, retire, or let anything lapse — and if they do not meet, say so to us or to the plan while there is still time to move one of them.

Never allow the old coverage to end before the new coverage is confirmed active.

Special cases worth a telephone call

Disability before 65. Medicare eligibility can begin earlier, and the coordination rules differ.

End-stage renal disease. There is a separate and more complicated set of rules with its own coordination periods.

Small employer, spouse still working. The threshold applies to the employer providing the coverage, which is not always the one you are thinking of.

Union or multi-employer plans. These sometimes carry their own coordination arrangements that do not match the general rule.

If any of these describe you, this is the point to stop reading and speak to someone. A SHIP counselor will do it free and sells nothing.

We will walk it with you at no cost, for the plans we can offer. If your situation is simple, HealthCare.gov and the Medicare Plan Finder will get you the same answer free, and a SHIP counselor or a Navigator will sit with you through it while selling nothing.