What Happens If You Are Late Paying Your COBRA Premium

woman on phone while a man looks stressed holding bills

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If you’re using COBRA health insurance, chances are you’ve gotten a divorce, lost (or left) your job, aged off a parent's health plan, or your spouse died. Any of these situations can make your finances fragile and your bills harder than usual to pay. Likewise, the stressfulness of these situations can make you prone to lose track of details here or there.

Although the deadline to pay your COBRA health insurance premium is a bad detail to forget, you aren’t the first person to be late paying your COBRA premium. The consequences of being late paying for COBRA can range from a bit of a hassle to permanently losing your COBRA coverage. What happens in your situation depends on whether you’re late on your initial COBRA premium payment or late with a payment for ongoing COBRA coverage.

It's also important to note that under COBRA rules, the health plan is not required to send monthly premium notices. Your plan may do so, but it's wise to set yourself some sort of reminder to ensure that you remember to pay your premium, even if you don't get a premium notice from the insurance company.

Late Paying Your Initial COBRA Premium

Your Initial COBRA premium must be paid within 45 days of the time you elect COBRA coverage. Your COBRA administrator will consider the date your COBRA election notice is postmarked to be the date you elect COBRA. That postmark sets your 45-day clock ticking.

This initial COBRA premium payment will be larger than subsequent monthly payments since it usually covers more than one month of health insurance coverage. Include enough money to cover your premiums from the date you lost coverage due to your COBRA-qualifying event through the date you elected COBRA coverage.

For example, if you lose coverage on May 1 and mail your COBRA election form on June 15, your initial premium must be paid within 45 days of June 15. You have to include sufficient funds to cover your COBRA insurance from May 1 through June 15.

There is no grace period if you’re late paying your initial COBRA premium payment. If it isn’t paid on time (ie, within 45 days of electing COBRA), you lose your right to have COBRA coverage; you’ll have to find other health insurance options or you’ll be uninsured.

Late Paying for Ongoing COBRA Health Insurance

While premium payments for ongoing COBRA coverage should be paid by the date the plan says they’re due, you have a little more flexibility than you did with your initial COBRA payment. There’s a minimum 30-day grace period for late premium payments. If you don’t make your premium payment either on time or within the 30-day grace period, your coverage can be canceled permanently.

What happens if you make your premium payment late, but are still within the 30-day grace period? Your coverage will probably be canceled, but you can get it back. If your health plan hasn’t received your payment by the due date, it has the right to cancel your coverage on the first day of that coverage period. However, it must reinstate your coverage if you make your payment within the 30-day grace period. The reinstated coverage will be retroactive to the first day of that coverage period.

An Example

Let’s say you’ve been on COBRA continuation health insurance for 6 months. Your health plan sets May 25 as the due date for your premium for coverage from June 1 through June 30. You miss the May 25 deadline. Your health insurance coverage is canceled on June 1.

You break your ankle on June 10 and rack up an emergency room bill for $4,000. On June 15, you hobble to the post office on crutches, mailing your late COBRA premium payment well within the 30-day grace period. Your health insurance company has to reinstate your coverage. The reinstated coverage is retroactive to June 1, ensuring that you continue to have seamless coverage.

Several days after mailing your late COBRA payment, you get a bill from the emergency room saying that you owe the entire $4,000. The emergency room billing clerk says your claim was denied because your health insurance wasn’t in effect on the day you received the care.

You explain that you paid your COBRA premium late, but within the grace period, and that your COBRA health insurance has been reinstated with coverage retroactive to June 1. You ask her to submit the claim to the insurer again. This time, your health insurance pays its share of the bill, leaving you to pay your deductible and coinsurance.

If you had waited until June 26 to make your late COBRA premium payment, you would have been beyond the 30-day grace period and your COBRA coverage would have been canceled permanently. You would be uninsured, and you would have no help paying that ER bill. The 30-day grace period is measured from the premium due date, not from the start of the coverage period.

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