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Paying For COBRA

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Generally, employees pay 100% of a COBRA health insurance premium - plus your employer is entitled to charge an extra 2% of the premium to cover the employer's administrative costs. Here is an example:

  • Assume the health insurance premium is $100 a month and that as an employee, you only paid 20% of the premium ($20). The employer paid the rest.
  • You now have to pay the entire $100 a month.
  • In addition, your ex-employer can charge up to $2.00 extra a month for administrative costs.
  • In sum,under COBRA, you may now have to pay $102. a month. (Keep in mind the good news: you continue to have health insurance for your health condition with no question about new pre-existing condition limitations).

The amount you pay is the current monthly cost of the coverage. The amount of the premium is not limited to the amount of premium only when you were working. If your employer receives an increase in premium, that increase may be passed along to you, plus the 2% administrative charge.

The premium payments must be made no later than the end of the grace period, usually 30 days after the premiums are due. This is very important. If coverage is terminated for nonpayment of premium, there is no right to reinstatement.

You are not required to maintain supplemental benefits such as dental or vision coverage. You don't have to pay for them if you choose not to. 

Payments are generally made to the ex-employer which in turn pays the insurer. Your employer may use a COBRA administrator to collect payments from you, which are then sent to the insurance company.  

If you receive Trade Adjustment Assistance benefits or are between the ages of 55 And 65 and receive pension payments from the Pension Benefit Guarantee corporation, you may qualify for a federal program known as HCTC.  HCTC pays 80 percent of health insurance premiums for people who qualify. For information, see: HCTC: Eligibility Requirements and How to Receive the HCTC offsite link.  

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