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 lost (or left) your job, gotten a divorce, aged off a parent's health plan, or your spouse transitioned to Medicare or passed away. 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, so the plan cannot terminate your coverage if, for example, you're 10 days late in paying your premium one month. But if you don’t make your premium payment either on time or 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. But if you don't, your coverage will be terminated back to the last date for which you had paid a premium. See this sample termination letter for clarification; any medical bills that had been incurred during the grace period would not end up being covered under the COBRA policy.

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 and enter your grace period.

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 credit your payment for June, ensuring that you continue to have seamless coverage.

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 (assuming your plan uses the minimum required grace period; plans can offer longer grace periods if they choose to do so). 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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Article Sources

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  1. U.S. Department of Labor; Employee Benefits Security Administration. FAQs on COBRA Continuation Health Coverage for Employers and Advisers. December 2018

  2. United States Department of labor, Employee Benefits Security Administration. An Employer's Guide to Group Health Continuation Coverage Under COBRA (The Consolidated Omnibus Budget Reconciliation Act of 1986).

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