What if I elect COBRA but don't pay?
Asked by: Geraldine Mitchell | Last update: February 22, 2025Score: 4.5/5 (33 votes)
What happens if you elect COBRA but don't pay?
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 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 ...
Can I stop paying for COBRA?
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.
What are the disadvantages of COBRA coverage?
- COBRA can be expensive, especially compared to the premiums you were paying before your qualifying event. ...
- COBRA does not apply to all employer-sponsored health plans—in particular, those organizations with fewer than 20 employees may have no requirements. ...
- Even if you get an extension, COBRA is only temporary.
How do Cobra and Medicare Work Together?
Is it worth paying for a COBRA?
While it may seem like a lot of money, COBRA may actually cost you less than what you'll pay on the open market. That's because you may still get your former company's group discount. You can also use a health savings account (HSA) to pay for your COBRA premiums. They're considered a qualified medical expense.
Can I ignore COBRA coverage?
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?
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.
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.
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 there a better option than COBRA?
Marketplace insurance, available through the Affordable Care Act, often offers more affordable premiums than COBRA. The cost difference can vary based on the chosen plan, location, and income, as subsidies may reduce premiums for marketplace plans.
How much does COBRA typically cost per month?
The average monthly cost of COBRA Insurance premiums ranges from $400 to $700 per individual.
What can I do instead of COBRA?
- You can enroll in a Marketplace plan within 60 days of losing your job-based coverage.
- Find Marketplace plans and prices to compare them to your COBRA coverage or offer.
- If eligible for Medicaid or CHIP, you can enroll in those programs any time and coverage can start immediately.
Can I pay for just one month of COBRA?
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.
What is the grace period to elect COBRA?
Is there a grace period? The COBRA law allows for a 30-day grace period, after the premium due date, for paying or postmarking your premium. Please note, 30 days does NOT mean 31 days. There is no way to extend the deadline, even if you are out of town or forget to make your payment.
Do employers ever pay for COBRA?
Yes, an employer can pay all or part of a former or current employee's COBRA premiums.
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 is the penalty for not paying COBRA?
Penalties for Non-Compliance
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.
Can I sue my employer for not offering COBRA?
The employees along with the beneficiaries have the right to sue to cover the medical expenses that would have taken place when the COBRA should have been offered.
What is the 105 day COBRA loophole?
So, if you maxed out the 60 day election period plus the 45 day payment period, you could actually go 105 days without paying for the coverage.
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.
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.
Does not paying COBRA affect credit?
There is no debt with COBRA. Payment of COBRA premiums is at the option of the qualified beneficiary. Non-payment of COBRA premiums does not affect one's credit score.
Is COBRA coverage worth it?
“If you're close to meeting your deductible on your current insurance plan and you have high health care costs, it may be worth it to temporarily stay on your COBRA plan,” explains Donovan. The same holds true if you're far into your employer plan's year and have already met your deductible.
Can you opt out of COBRA anytime?
Yes, you can cancel COBRA coverage at any time. However, be aware that cancellation does not trigger a special enrollment period for new health insurance.