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Due to COVID I loss work.

I requested COBRA paperwork filled them out and returned them to my former employer I never received any bill or any request for payment. I never paid anything toward my COBRA. Now my former employer is asking for back payments. I was under the assumption that I would need to make payments within 45 days or the policy would be canceled.

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  • Did the COBRA paperwork include payment information? Does the COBRA paperwork specify a payment grace period or cancelation terms? 45 days is not universal, was that written in the paperwork you received? Typically COBRA paperwork includes pretty strict language regarding payment, specifically the need to receive payment before coverage can be continued, I would look for that language and send it back to them. Courtesy or not, you shouldn't have been covered if you didn't pay.
    – quid
    Dec 30 '20 at 3:57
  • the clause states. "You do now have to send payment with the election form" "Your first payment for continuation coverage not later then 45 days after the date of your election. You lose all coverage if not paid..." Dec 30 '20 at 4:04
  • Ya, send them that paperwork with that part highlighted.
    – quid
    Dec 30 '20 at 4:05
  • I think the 45 day limit was put on hold because of COVID. However, that doesn't mean you automatically owe money for all the time; only that you can still decide to take the insurance and pay retroactively. But you can always decline - then you are retroactively uninsured.
    – Aganju
    Dec 30 '20 at 8:11
  • @quid That doesn't say that you have to make the payment nor does it say that you will lose coverage if you don't make the payment. That could well mean that you have 45 days to cancel or you will lose insurance if nobody makes the payment. Dec 31 '20 at 5:49
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The paperwork you signed should have made it clear who was responsible for the cost of the insurance.

Normally there is a requirement to make the first payment within 45 days. That requirement was loosened due to the COVID emergency.

Ignoring the emergency changes, the system doesn't require the payment to come from the former employee. COBRA payments can also be made by the former employer, the new employer, a union, or some other third party.

The paperwork should have made it clear how the payment was to be made, including how you would be billed if you had a responsibility for the payments.

Speaking of payments, the paperwork should have made clear what it would cost you. There is no rule of thumb. I have known companies that normally pay 100% of the premium for their employees; so if they went under COBRA they would now have to to go from paying 0% to paying 100%. Other companies pay 100% for the employee but a lower percentage for the rest of the family.

The paperwork should have also given you the method for canceling the coverage.

Please review all the paperwork you submitted, and any other documents you received related to this situation.

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  • There was nothing beyond a boiler plate cluase about the 45 days. There was no clear indication if any about how it was to be paid, by whom or how and when I would be billed. Dec 30 '20 at 13:05
  • @tinactin1234 Then likely your employer did you a favor by making the payment to make sure you wouldn't lose insurance despite the fact that you were obligated to pay it. I don't see what, if anything, would remove your obligation to pay. Dec 31 '20 at 5:50
  • @DavidSchwartz, that's not how COBRA works. If the employer wanted to pay for a few months that's fine, or extend the payment window, that's fine. But once payment was not received he should have been terminated, that's the responsibility of the COBRA administrator. I say in my comment above, COBRA is not a relationship between ex-employee and insurance carrier, it's a rule that says ex-employer is required to allow ex-employees to participate in their plan. Capturing payment is the responsibility of the administrator, in this case it looks like the administrator is the ex-employer.
    – quid
    Dec 31 '20 at 18:28
  • @quid Payment was received. Coverage must be stopped if no payment is made. But nothing prevents coverage from continuing if the former employer makes the payment. Payment was captured, so insurance continued. The employee was obligated to make the payment, the employer made the payment, insurance continued. Jan 1 '21 at 6:54
  • Again, you're ignoring what COBRA is and how it works. It's the responsibility of the COBRA administrator to collect payment and communicate eligibility, payment is a criteria of eligibility, payment wasn't made by the qualified beneficiary, 45 days was communicated, coverage should have been canceled when payment wasn't received by the COBRA admin after 45 days. This can't be both some favor from the ex employer and a debt owed to the ex employer. This is a pretty clear administrative error they're trying to correct by collecting from this person.
    – quid
    Jan 1 '21 at 17:04
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Employer Paid COBRA asking for reimbursement

They probably (I'm just guessing, based on age/experience) did that as a courtesy to you so that you would not lose your COBRA insurance.

I was under the assumption that I would need to make payments within 45 days or the policy would be canceled.

Yes, that's true. You probably weren't the only person released; given the flood of paperwork, and need to work from home, there was probably a backlog in processing them.

Now that they've processed the paperwork, they reasonably want their money back.

You should have:

  • called your company after a few weeks to ask them about your COBRA paperwork, and
  • put aside 3x your standard health insurance payments, because that's approximately what COBRA costs.

(Of course, I completely sympathize with not doing what you "should" do in this traumatic time, so don't take my comment as a criticism.)

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  • how can they do this as a courtesy without informing me and asking for 6+ months. I'm also under the impression now that I cannot claim any tax benefits on this now because i did not pay directly. Also due to such late notice. I am not able to set up any HSA accounts to help offset any potential cost. Dec 30 '20 at 3:37
  • 2
    "how can they do this as a courtesy without informing me and asking for 6+ months." A counter-question: why didn't you ever call them?
    – RonJohn
    Dec 30 '20 at 4:04
  • @tinactin1234 what tax benefit?
    – quid
    Jan 1 '21 at 17:15
  • Now that they've processed the paperwork, they reasonably want their money back. They or their COBRA admin made clerical error and should be working with the insurance carrier to cancel the coverage back to when it should have been cancelled but for their error.
    – quid
    Jan 1 '21 at 17:21
  • @quid which means that OP loses their coverage through minimal fault of their own.
    – RonJohn
    Jan 1 '21 at 17:23

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