What happens if I elect COBRA but don't pay?

Asked by: Jewell Goodwin  |  Last update: June 2, 2025
Score: 4.9/5 (43 votes)

The plan cannot require you to pay a premium when you make the COBRA election. It must provide at least 45 days after you elect COBRA for you to make an initial premium payment. If you fail to make any payment before the end of the initial 45-day period, the plan can terminate your COBRA rights.

Can you elect COBRA and not pay?

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.

What happens if you don't make a COBRA payment?

Failure to make payment in full before the end of a grace period could cause you to lose all COBRA rights.

Can I cancel COBRA by not paying?

If you decide to cancel your COBRA, you do do so at any time. But the termination of your COBRA due to failure to pay premiums (or your choice to cancel it) will not trigger a special enrollment period to sign up for an individual/family plan or another employer's plan.

What happens if I can't afford COBRA?

Instead of enrolling in COBRA continuation coverage, there may be other more affordable coverage options for you and your family through the Health Insurance Marketplace, Medicaid, or other group health plan coverage (such as a spouse's plan) through what is called a “special enrollment period.” Some of these options ...

Avoid Major Problems by Being Cobra Compliant!

25 related questions found

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.

How much does COBRA typically cost per month?

COBRA coverage is not cheap.

A COBRA premium can cost on average $400 to $700 a month per person.

Does not paying COBRA affect credit?

Note: we do not report non-payment to credit bureaus. If you are currently receiving COBRA coverage for which a premium is being paid and you wish to waive future coverage, you can simply refrain from paying the COBRA premium for that coverage period.

Why is COBRA so expensive?

Why is COBRA more expensive than employer-sponsored insurance? COBRA is more expensive because the individual is responsible for the entire premium amount without the employer's financial contribution that is provided during active employment.

What happens if you don't offer COBRA?

DOL ERISA Penalties — An employer is liable up to an additional $110 per day per participant if they fail to provide initial COBRA notices. ERISA can also hold any fiduciary personally liable for non-compliance.

What is the penalty for COBRA notice?

Failing to adhere to COBRA rules can result in costly penalties. The Department of Labor may impose fines of $110 per day per qualified beneficiary for non-compliance with notice requirements, and the IRS can levy excise taxes for violations.

Is COBRA a mandatory benefit?

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal law that requires employers of 20 or more employees who offer health care benefits to offer the option of continuing this coverage to individuals who would otherwise lose their benefits due to termination of employment, reduction in hours or ...

What happens if your insurance gets cancelled for non-payment?

You'll usually have 10 to 20 days between the date of the cancellation notice and the date you are no longer covered. The exact amount of time differs by state. After that, your insurance will officially lapse and you'll no longer be able to drive your car legally.

Can I decline COBRA?

Decide not to participate in COBRA and apply for special enrollment through Covered California. Because you will be newly uninsured, you will qualify for special enrollment in a Covered California health insurance plan outside of the annual open-enrollment period.

Do employers ever pay for COBRA?

Yes, an employer can pay all or part of a former or current employee's COBRA premiums.

What happens if I don't pay my health insurance bill?

If, by the end of the 90-day grace period, the amount owed for all outstanding premium payments is not paid in full, the insurer can terminate coverage. In addition, during the first 30 days of the grace period, the insurer must continue to pay claims.

Is there a cheaper alternative to COBRA?

Not only are Marketplace health insurance plans typically less expensive than COBRA, most Marketplace applicants (91% in 2022) qualify for at least some government subsidy to help pay their premiums. The amount of the subsidy depends on your income, where you live and the size of your family.

What are the cons of COBRA?

What are the disadvantages of COBRA insurance?
  • It's expensive. Your premiums will probably go up since your employer isn't contributing. ...
  • You're subject to your employer's plan offerings. You might lose COBRA coverage if the employer changes its plan or goes out of business.

What to do when a COBRA is too expensive?

If COBRA feels expensive, consider ACA plans or short-term health insurance. Marketplace plans during the open enrollment period or a special enrollment period can offer more budget-friendly options.

What disqualifies you from COBRA?

Why would an employee not qualify to enroll in Cal-COBRA? The employee is enrolled in or eligible for Medicare. The employee does not enroll within 60 days of receiving the notice of eligibility from the employer. The employee is covered by another health plan.

Does COBRA affect your taxes?

There isn't necessarily a “COBRA Tax Deduction”. You can only deduct the amount of COBRA medical expenses on your federal income tax in excess of 7.5% of your Adjusted Gross Income and then only if you itemize deductions.

How much does COBRA cost per month?

This means health plan costs could jump to over $717 per month for an individual opting into COBRA, including the extra fee, and to over $2,037 per month for family coverage. To help defray some of the steep costs associated with COBRA coverage, you can use funds in your health savings account (HSA) to cover premiums.

Is COBRA cheaper than Obamacare?

COBRA costs an average of $599 per month. An Obamacare plan of similar quality costs $462 per month—but with the government subsidies available, the average cost of an Obamacare plan on HealthSherpa is less than $10 per month. But ultimately, it depends on your situation.

Can I cancel COBRA and enroll in marketplace?

You can only drop COBRA and sign up for a Marketplace plan and premium tax credits during Open Enrollment.

Does COBRA coverage begin immediately?

Assuming one pays all required premiums, COBRA coverage starts on the date of the qualifying event, and the length of the period of COBRA coverage will depend on the type of qualifying event which caused the qualified beneficiary to lose group health plan coverage.