Dilemma - Take Cobra or Retiree Medical?

[Pat H Senior Member Find all posts View Profile Close Pat H]

When I decided to take a severance package in Nov 2009, it was based on some things that were in effect at that time. So far 3 things have changed that are to my detriment. The latest is my medical coverage. I put in for retirement as of 2/1/11 when my severance ends. I planned to use Cobra for 18 months and then retiree medical for 5 months until I was eligible for Medicare. I found out yesterday that as of 1/1/11 retirees can no longer take Cobra and defer retiree medical. If I don't take retiree medical right away, I lose it.

Cobra costs $598/mo vs retiree at $808. I do not know what medical will cost when I get Medicare. My thinking is that I may as well take Cobra and save the $210/mo for 18 months and then use the savings to pay for another medical insurance for the 5 months before Medicare. I'm assuming that I can find a reasonably priced coverage for emergency situations.

Am I missing anything with my thinking? Any advice?

[JWC Super Moderator Find all posts View Profile Close JWC]

I understand your situation. I had my own business. Prior to my being eligible for Medicare, my wife and I provided our own group insurance through my corporation. My wife was a homemaker and always has been. I became eligible for Medicare in 2005 so I dissolved the corporation and terminated our group insurance. I got a good Medicare Advantage plan which doesn't charge any premium. My wife, who is not eligible for Medicare yet got a private individual plan. She has pretty decent insurance and the premium is $500 /mo. She still has a couple years until Medicare.

In your case you will only have a few months until Medicare so you may want to consider getting an individual plan to tide you over. It could be cheaper than cobra or your retiree insurance. Of course it all depends on your particular situation but you may want to investigate that option.