Although that may seem like a lot of money, COBRA premiums are usually less than you’d pay on the open market ― because you’re still benefiting from your company’s group discount. May I pay for a terminated employee’s COBRA … There are also administrative fees that can be tacked on but, but you may be able to opt out of dental and vision plans to save money. As an alternative to premium reimbursement arrangements, an employer simply could provide the employee with unrestricted cash. The 102% represents the total premium (employee’s share plus the employer’s share) plus a 2% administrative fee. You can’t receive distributions from your FSA for the following expenses. My employer contributes $50 per pay period to my HSA. COBRA is expensive. Although many employers do subsidize COBRA, especially as part of a severance package, this is not required. Under COBRA, you’ll be responsible for 100% of your premium, so your monthly COBRA payment may be 5 times higher than your payroll deduction. I voluntary left my job earlier this year and took cobra for a few months before I got my individual coverage. By simply paying the COBRA premium, that employer can avoid having to pay the actual medical claim. This will require the employer to adopt some form of substantiation procedure for these types of arrangements. Employers are not required to make any contribution toward COBRA continuation coverage, even if the employer made a contribution prior to the individual’s loss of benefits. No. Can I pay my medical premiums tax-free from my HSA? Don't wait, contact an attorney, now! A: COBRA is not an insurance company. Despite the fact that you pay the COBRA premiums, they might not amount to enough to actually result in a tax deduction. The employee then could choose to pay COBRA premiums with the cash or could use it for anything else. The consequences of being late paying for COBRA can range from a bit of a hassle to permanently losing your COBRA coverage. It's also important to note that under COBRA rules, the health plan is not required to send monthly premium notices  . Preferably one experienced in the nuances of employee benefits and COBRA. If you’re eligible to claim medical deductions, you can count COBRA premiums. FAQ #10: How much does COBRA cost? 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 … Regulations: IRS Notice 2011-1: You may be eligible to deduct any COBRA premiums you pay from your taxable income. Pay the COBRA premiums directly to the COBRA administrator (or to the employee via check made out directly to the COBRA administrator); or; Distribute reimbursement to the employee only upon the employee substantiating the expense (i.e., only upon the employee providing a receipt showing proof of payment). If an employee elects COBRA, can FSA funds be used to pay COBRA premiums? This will require the employer to adopt some form of substantiation procedure for these types of arrangements. COBRA coverage can extend your insurance coverage if both you and your … There are a few methods of payment for COBRA: You may pay by check, bill pay, online payments using checking/savings account (ACH) on our website, or payments can also be made over the phone. You can make tax-free distributions from your HSA for pre-Medicare medical insurance premiums only when you continue coverage through COBRA or are collecting unemployment benefits. COBRA premiums are not eligible with a limited care flexible spending account (LCFSA) or dependent … I was surprised at how obsessed people are about their health insurance. income limitations for the COBRA premium assistance; whether your COBRA premium assistance is taxable and if so, how much; how to calculate any recapture or pay back of the COBRA premium assistance you received, how to report this on your federal income tax return, relevant laws, tax worksheets, and IRS resources. Qualified beneficiaries have 45 days after the election date to make an initial premium payment.