COBRA and Medicare… Oil and vinegar or two peas in a pod?


There are lots of things that are consistent when it comes to Medicare. It runs very smoothly, is a pretty well-oiled machine, and policy holders are overall very pleased. But we also see a lot of uncertainty or overwhelm when trying to fully understand it all. It can be intimidating with the regulations and guidelines to follow that could result in financial penalties if not abided by appropriately. But it doesn’t have to be scary or stressful. That’s what we’re here for.

One of the areas that can seem confusing is when people are approaching age 65 (Medicare eligible) and planning to no longer work. There are options to select COBRA coverage, essentially extending the employer’s group coverage, or enroll in Medicare. Here, we’ll break this down as simply as possible to provide a little guidance.

First, let’s be sure we’re on the same page with what exactly COBRA is. COBRA (Consolidated Omnibus Budget Reconciliation Act) gives employees the right to choose a continuation of the previous employer’s group health plan for a limited time. Usually, that time frame is 18 months but may be extended up to 36 months in some situations. There may be some instances where the coverage changes slightly and the premium is usually a little higher than it was for an active employee prior to retirement, up to 102% of the cost of the plan. Employers with 20 or more full time equivalent employees are generally required to offer COBRA. Spouses can also be eligible for COBRA if:

• The covered employee either voluntarily or involuntarily leaves the job
• The covered employee’s number of hours are decreased making them ineligible for benefits
• The covered employee becomes eligible for Medicare
• Divorce or legal separation from the covered employee
• Death of the covered employee

A commonly used term when entering the Medicare world is “creditable coverage”. This is referring to coverage outside of Medicare being qualified to take the place of Medicare so that there are no late enrollment penalties if you don’t enroll on time. “Creditable” also means that the coverage is expected to pay on average as much as the Medicare coverage would. COBRA is NOT considered creditable for Part B of Medicare. Only active employer group coverage for an employee still working would suffice for that. Regarding Part D prescription drug coverage, it is plan specific whether or not it’s creditable.

Real life example: Bill decides to retire right at age 65. He’s been on his employer’s group plan for 25 years. He can elect COBRA to keep that plan but also needs to enroll in Medicare, now that he’s eligible. Medicare would then become his primary. If he didn’t enroll in Medicare and stayed just on COBRA, he could face a substantial gap in coverage. Let’s say he sees a doctor, they bill Medicare A&B for the standard 80% payment but he doesn’t have any Medicare. So then they bill COBRA, who could pay just 20% of the total cost or possible nothing at all, since they’re secondary with him being 65+ now and he technically doesn’t have any primary coverage. Bill could now be stuck with a bill (see what we did there?) for 80-100% being his responsibility to pay out of pocket. So, Bill, lesson learned… what he should have done is upon retirement, enroll in Parts A&B as soon as he stopped working and then compared his COBRA coverage and premium to that of a supplement or advantage plan to decide on the best secondary coverage.

A few things to consider if you’re going to stop working or are 65+ with COBRA:

• What are the options for your spouse or family?
• Is your employer’s COBRA coverage “creditable” for Medicare?
• What is the cost of COBRA vs a Medicare supplement or advantage plan?
• You have 8 months from when you stop working to enroll in Parts A&B without penalty

It may seem like a lot but this is a big transition from working to not, so don’t take it lightly. We can help work through the details and relieve some of the stress. The positive part of it all is that there are options for care and you get to pick the best fit for you.

Additional auto insurance carriers are issuing premium refunds

Some people may think insurance companies are only there for them when they need to file a claim. Well, we are pleased to share some good news that shows how much auto insurance carriers across the board really do care.

These are challenging times and your insurance company wants to help! Many drivers are using their vehicles less as they abide by our current stay-at-home orders. Therefore, the following companies will all be issuing a one-time premium refund for personal auto policies during the COVID-19 pandemic. Each company is handling it slightly different so we’ve included the details below. This only applies to motor vehicle policies (not including golf cart, motorcycle, ATV or boat). This is still awaiting final regulatory approval but is headed in the right direction.

The best part about this is that policyholders don’t need to do anything! Refunds will automatically be either credited to their policy account or refunded.

*Nationwide: $50 per policy active as of March 31, 2020

*Safeco: 15% of premium as of April 7, 2020 for 2 months

*Auto Owners: 15% of premium for April and May, 2020

*Mercury: 15% of premium for April and May, 2020

*Progressive: 20% of April premium (refunded in May) and 20% of May premium (refunded in June)

*Chubb: 35% of premium for April and May, 2020 upon annual renewal

*Travelers: 15% of premium for April and May, 2020

*MetLife: 15% of premium for April and May, 2020

*AAA: 20% of auto premium for April and May, 2020

Geico: 15% of premium as the policy comes up for renewal between April 8-October 7, 2020. The credit will also apply to any new policies purchased during this period.

Allstate: 15% of premium for April and May, 2020

USAA: 20% of premium as of March 31, 2020 for 2 months

State Farm: 25% of premium for policies in-force between March 20-May 31, 2020

Hartford: 15% of premium for April and May, 2020

Liberty Mutual: 15% of premium as of April 7, 2020 for 2 months

Florida Fam Bureau: 15% of premium for April and May, 2020

*The companies with an * are the carriers in which we, at McGriff-Williams, represent and received this data directly from. Information regarding the other companies listed here was collected from their individual websites.

What does “furlough” mean anyway?

Furlough. It’s a rare term to hear in the workplace until something like a government shut down or pandemic such as Covid-19 happens. There’s a difference between a furlough and a layoff and it’s extremely important for both employers and employees to understand them fully.


A “furlough” is when the employment is maintained but hours are reduced or the employee is placed on unpaid leave. This would make sense if an employer wanted to keep the employee and thought a temporary hardship would be better than terminating them completely. With a furlough, the employee may still qualify for unemployment as well.


Exempt employees (those not eligible for overtime) have to be paid their normal weekly salary if they do any work at all so it is usually, in a situation like our current Covid-19 quarantine, employers would encourage employees to NOT work at all. Non-exempt employees can be paid for actual hours worked without any further pay implications.


Typically, the furloughed employee can keep their health insurance but will be responsible to pay their portion of the premiums throughout the furlough. Often times, companies will restore employment following a furlough and provide back the following:


• Retention of seniority
• Maintained benefits such as health insurance with no lapse in coverage
• The ability to use any PTO/vacation time/sick leave as accrued


A “layoff” is less promising as it’s usually permanent… but a temporary layoff could be an option if it’s just due to a short period of time where there is no work for that employee. A layoff does include actual termination of employment, whereas the above mentioned benefits would not apply.


In an ideal world, neither furloughs or layoffs would happen. However, as we’ve quickly learned, they can become reality and we all need to be prepared to make appropriate arrangements in the event something like this occurs.

Auto Insurance Relief Refunds pending approval

Our agency is proud to partner with several companies that not only provide great coverage for our clients but also keep their best interest at heart. Our goal is to help protect our clients and their families during these challenging times and we are excited to share some good news!

Many drivers are using their vehicles less as they abide by our current stay-at-home orders. Therefore, Nationwide, Safeco, Auto Owners, Mercury, Progressive, Chubb and AAA will all be issuing a one-time premium refund for personal auto policies during the COVID-19 pandemic. Each company is handling it slightly different so we’ve included the details below. This only applies to motor vehicle policies (not including golf cart, motorcycle, ATV or boat). This is still awaiting final regulatory approval but is headed in the right direction.

The best part about this is that policyholders don’t need to do anything! Refunds will automatically be either credited to their policy account or refunded to the most recent method of payment (for example: automatic withdrawal, credit card, personal check), likely within the next 30 days.

Nationwide:
$50 per policy active as of March 31, 2020

Safeco:
15% of premium as of April 7, 2020 for 2 months

Auto Owners:
15% of premium for April and May, 2020

Mercury:
15% of premium for April and May, 2020

Progressive:
20% of April premium (refunded in May) and 20% of May premium (refunded in June)

Chubb:
35% of premium for April and May, 2020 upon annual renewal

AAA:
20% of auto premium for April and May, 2020

Again, we are honored and grateful to do business with companies like these that really look out for their clients and do what’s right in times of need. Please reach out to us any time you have questions regarding auto insurance. You can call us at (352) 371-7977 or email info@mcgriffwilliams.com. Stay well and safe!

Health insurance options during COVID-19

Unfortunately during the current pandemic we’re experiencing, some people are losing their jobs. While there’s hope to be rehired once this has passed, one of the immediate concerns is the benefits that go along with that job. Here are some options that may relieve a little bit of the worry and fear surrounding this.

Current Options for Health Insurance:

  1. Purchase Individual Health Insurance Plan – Losing a job with employer-provided coverage qualifies for the Special Enrollment Period (“SEP”) exception outside of Open Enrollment. Some may even be eligible for subsidies based on their income, which would offer premium assistance.
  2. Temporary Plans – These are also available if someone is only interested in more catastrophic coverage for a short period of time.
  3. Cobra – One’s employer (if they have 20 or more full-time employees) may offer this to extend coverage for up to 18 months after employment ends. It is recommended that anyone eligible for Medicare avoid this option but details can be discussed further on a case-by-case basis.
  4. Direct Primary Care – These are membership based clinics that focus on proactive, preventive care by establishing a relationship and individualized plan of care. They do not accept or file with health insurance companies and don’t include coverage for major health needs or hospitalization. However, it may be worth a conversation to see what they offer since it could be a lower cost option during tough times. Here is a map that shows where DPC’s can be located: https://mapper.dpcfrontier.com/
  5. If 65 years old and Medicare eligible – It’s most important to be timely in applying and seek guidance on Advantage Plans, Supplements, and Prescription Drug coverage. It’s best to start this process around 64.5 to avoid any potential penalties financially.

We are happy to help navigate these options to see which is the best fit for your needs, whether it’s temporary or long-term. Please reach out anytime at (352) 371-7977 or info@mcgriffwilliams.com. Stay safe!