Can I reimburse an employee for COBRA?
Asked by: Mrs. Mireya Welch Jr. | Last update: July 31, 2025Score: 4.4/5 (4 votes)
Can an employer reimburse an employee for COBRA?
Yes, an employer can pay all or part of a former or current employee's COBRA premiums.
How do I get reimbursed through COBRA?
How do I file a COBRA claim for reimbursement of benefits? Your COBRA paperwork must explain how to obtain benefits and must include written procedures for processing claims. Claims procedures must be described in the Summary Plan Description.
Is it legal to reimburse employees for health insurance?
If employees do not receive health insurance through their work, they must independently obtain insurance through the individual health insurance marketplace. Employers can then reimburse employees for the costs of these plans through a health reimbursement arrangement (HRA).
What is the COBRA loophole?
If you decide to enroll in COBRA health insurance, your coverage will be retroactive, meaning it will apply to any medical bills incurred during the 60-day decision period. This loophole can save you money by avoiding premium payments unless you actually need care during this time.
COBRA Subsidy: Who’s Eligible, How it’s Funded, and How to Deliver Notices to Employees
Can you back pay a COBRA?
COBRA is always retroactive to the day after your employer coverage ends. So, you'll need to pay your premiums for that period too.
What are the rules for COBRA coverage?
- Your group health plan must be covered by COBRA.
- A qualifying event must occur.
- You must be a qualified beneficiary for that event.
Can an employer reimburse an employee for expenses?
Yes. Expense reimbursement is required by law. Your employer must reimburse you for “all necessary expenditures or losses” incurred by you “indirect consequence of the discharge of [your] duties” or “in obedience to [your employer's] directions.” California Labor Code §2802.
What are the IRS rules on health reimbursement accounts?
An HRA must receive contributions from the employer only. Employees may not contribute. Contributions aren't includible in income. Reimbursements from an HRA that are used to pay qualified medical expenses aren't taxed.
Can I give my employees money for health insurance?
As you revamp your company's employee benefits package, you may wonder if you can reimburse your staff for health insurance. Yes, you can. Not only does this allow you to support your workers better, but it's also an excellent way to attract and retain talent at your company.
Can COBRA payments be refunded?
Request a Refund for Amounts Paid in COBRA Premiums Exceeding Federal Employment Tax Liability: The employer may claim the Credit through an employment tax refund on the applicable employment tax return, generally Form 941, Employer's Quarterly Federal Tax Return.
Who pays for COBRA after termination?
COBRA and Cal-COBRA
COBRA allows former employees, retirees, and their dependents to temporarily keep their health coverage. If you get COBRA, you must pay for the entire premium, including any portion that your employer may have paid in the past.
Are COBRA reimbursements taxable?
Answer: Reimbursement for COBRA payments are not taxable to the former employee and should not be reported on a Form 1099, Miscellaneous Information, or a Form W-2, Wage and Tax Statement. This is true regardless of whether the reimbursement is paid by the former employer or the employee's current employer.
Why is COBRA so expensive?
COBRA coverage is not cheap.
Why? Because you're now responsible for paying your portion of your health insurance: The cost your employer contributed to your premium, in addition to the 2% service fee on the cost of your insurance.
Is COBRA 18 months or 36 months?
In that case, COBRA lasts for eighteen months. If the qualifying event is the death of the covered employee, divorce or legal separation of the covered employee from the covered employee's spouse, or the covered employee becoming entitled to Medicare, COBRA for the spouse or dependent child lasts for 36 months.
Can employers subsidize COBRA?
Employers can choose how COBRA subsidies are paid. In some circumstances, employees can pay for their COBRA premiums from their severance payments on a pre-tax basis.
Can small businesses reimburse employees for health insurance?
Certain small employers—generally those with less than 50 employees that don't offer a group health plan—can contribute to their employees' health care costs through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
What is a disadvantage of a health reimbursement account?
Disadvantages: Non-Transferable Funds: Employers retain unused funds when an employee leaves. Contribution Limits: Annual contribution limits may restrict the amount employers can provide. Group Plan Compatibility: Employees might prefer existing group plans, potentially limiting QSEHRA adoption.
Is reimbursing an employee for health insurance taxable?
When an HRA complies with federal rules, employers can reimburse medical expenses, such as health insurance premiums, with money free of payroll taxes for both the employer and employee. An HRA is also free of income tax for the employee.
Can a company refuse to reimburse expenses?
California requires employers to reimburse employees for all "necessary" business expenses (Cal. Lab. Code §2802).
What is the employee reimbursement policy?
The expense reimbursement process allows employers to pay back employees when they spend their own money as part of conducting business. This typically does not need to be reported as income because employees are simply making up money they've already spent on your behalf.
Can I reimburse an employee for moving expenses?
Employers may pay all or some of the employee's moving expenses directly, such as paying a moving company to move the employee's household goods and personal effects. Or the employer may choose to reimburse the employee for all or some of his moving expenses.
How to pay for a COBRA?
Payment can be made by check (personal check, business check, cashier check, bill pay check from a financial institution of your choice), money order, recurring electronic payment, one-time electronic payment, debit card, or credit card.
What are COBRA rights after termination?
Federal COBRA is a federal law that lets you keep your group health plan when your job ends or your hours are cut. Federal COBRA requires continuation coverage be offered to covered employees, their spouses, former spouses, and dependent children.
Does COBRA work retroactively?
Yes, you would be covered from the date of your retirement and lost coverage. COBRA is meant to do exactly that. Even if you elect for COBRA a month after you lose your coverage, COBRA works retroactively after you elect it, all the way back to the date of the loss of coverage as long as you make your premium payment.