What happens if I don't pay my COBRA premium?

Asked by: Ms. Myriam Hessel  |  Last update: January 6, 2024
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COBRA allows a 30-day grace period. If your premium payment is not received within the 30-day grace period, your coverage will automatically be terminated without advance warning. You will receive a termination letter at that time to notify you of a lapse in your coverage due to non-payment of premiums.

What happens if you dont pay for COBRA premiums?

Late Paying for Ongoing COBRA Health Insurance

But if you don't make your premium payment within the 30-day grace period, your coverage can be canceled permanently. You're still covered during the grace period, as long as you ultimately do end up making your payment by the end of the grace period.

Can you cancel COBRA by not paying?

You can be required, however, to make an initial premium payment within 45 days after the date of your COBRA election (that is the date you mail in your election form, if you use first-class mail). Failure to make any payment within that period of time could cause you to lose all COBRA rights.

What is the grace period for COBRA premium payments?

What is the grace period for monthly COBRA premiums? After election and initial payment, qualified beneficiaries have a 30-day grace period to make monthly payments (that is, 30 days from the due date).

How do I avoid paying COBRA?

If you want to avoid paying the COBRA cost, go with a short-term plan if you're waiting for approval on another health plan. Choose a Marketplace or independent plan for broader coverage. Choose a high-deductible plan to keep your costs low.

Everything you Need to Know about COBRA Insurance

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Can I ignore COBRA?

You are responsible for making sure your COBRA coverage goes into and stays in effect - if you do not ask for COBRA coverage before the deadline, you may lose your right to COBRA coverage. You must decide to accept or reject COBRA coverage during a certain time period (usually 60 days after your employer notifies you).

What is the COBRA loophole?

Cal-COBRA is a California Law that lets you keep your group health plan when your job ends or your hours are cut. It may also be available to people who have exhausted their Federal COBRA.

Can you extend COBRA by one month?

When consumers elect COBRA continuation coverage due to termination of employment or a reduction of hours, they are generally allowed up to an additional 18 months of group health coverage. In certain circumstances, consumers may extend COBRA continuation coverage up to an additional 36 months of group health coverage.

Will COBRA pay retroactively?

This period is measured from the later of the date of the qualifying event or the date the COBRA election notice is provided. COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.

Do you pay for COBRA if you don't use it?

You can only stay on a COBRA plan for a limited time, often from 18 to 36 months. You'll have to pay the premiums back to the date of your qualifying event if you wait to accept COBRA. Coverage is retroactive.

Does COBRA end automatically?

COBRA Coverage Periods

You are not locked into COBRA coverage and can cancel at any time within 18 months. You will likely want to drop COBRA once you become eligible for a different health plan, such as if you get another job. If you stop paying premiums, COBRA coverage will end automatically.

Can I keep COBRA if I quit my job?

COBRA allows you to continue coverage — typically for up to 18 months — after you leave your employer. You can buy an Affordable Care Act (ACA) plan through a public exchange on the health insurance marketplace. Or you can switch to your spouse or partner's plan, if possible.

Can you stop COBRA at any time?

A person who elects COBRA can choose to cancel the coverage at any time (unlike active employee coverage, which can only be dropped during the employer's open enrollment period or during a special enrollment period linked to a qualifying life event).

How do I pay my COBRA premium?

The three ways to pay COBRA premiums are through ACH (linked to your bank account), credit/debit card or check. We recommend paying by ACH.

How do COBRA premiums work?

Your monthly COBRA premiums (or payments) will equal the total cost of the premium under your employer-sponsored health insurance, plus a 2% administration charge.

What happens when your COBRA runs out?

Marketplace plans are a viable option after your COBRA runs out. Luckily, when your COBRA coverage expires, it counts as a qualifying event for a special enrollment period. The special enrollment period allows you to qualify for coverage after the ACA Health Insurance Marketplace open enrollment period has closed.

How long can you back date COBRA?

COBRA beneficiaries have 60 days to decide whether they want COBRA coverage. If you enroll in COBRA before the 60 days are up, your coverage is then retroactive, as long as you pay the retroactive premiums.

How many months is COBRA retroactive?

COBRA is always retroactive to the day after your employer coverage ends. So, you'll need to pay your premiums for that period too.

Is COBRA tax deductible?

You can deduct the cost of COBRA health insurance on your federal income taxes. But as with most types of health insurance, COBRA premiums are considered a medical expense and can only be deducted if you itemize your deductions and your medical expenses are greater than 7.5% of your AGI for the taxable year.

Can I use COBRA for 2 months?

However, if you only need COBRA coverage for a short period of time, such as one or two months, you can pay only for those months from the coverage loss date.

Can you go on COBRA twice?

It may be possible for qualified beneficiaries to extend their original 18-month period of COBRA continuation coverage for an additional 18 months (for a total maximum coverage period of 36 months) if they experience a second qualifying event.

Can COBRA end in the middle of the month?

No. You cannot start and stop COBRA and you cannot skip any months. COBRA is always effective on the day after your active coverage ends and is continuous until terminated.

Will Biden pay for COBRA?

The federal government will pay 100 percent of COBRA insurance premiums for eligible employees who lost their jobs and for their covered relatives through September, allowing them to stay on their company-sponsored health plan, under the American Rescue Plan Act (ARPA) that President Joe Biden signed into law on March ...

Can COBRA last 36 months?

COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of 18 or 36 months. The length of time depends on the type of qualifying event that gave rise to the COBRA rights.

Why would I get a letter from COBRA?

Qualifying Event: At the end of your employment or because of reduction of hours (not maintain full-time status) you will receive this letter. It is VERY important that you review this letter and make your decision if you will need to continue your coverage through COBRA.