What to do when your COBRA paperwork doesn’t show up

Last Updated on July 18, 2016 by Dave Farquhar

I’m writing this to hopefully save someone from having as bad of a day as I’ve just had. You see, I started a new job on July 3. My new health insurance starts August 1. My former employer terminated my coverage on July 2. COBRA is intended to fill gaps like that, but all I have is a promise that my COBRA paperwork will show up someday. My former employer didn’t send the COBRA paperwork, just a promise that it was coming. Famous last words, you know.

That promise doesn’t help when my wife needs insulin today. And when my current employer doesn’t know what to do, my old employer won’t answer the phone, and my old insurance company doesn’t know what to do either, that’s enough to ruin your day.

What I didn’t know was that COBRA doesn’t work that way.

When your insurance lapses, you have 60 days to buy COBRA. It’s retroactive. So if 60 days goes by and you don’t need it, you don’t have to buy it. But if you do, buy it and then file those expenses. Just be sure to save all your receipts and statements. If your employer doesn’t provide the COBRA paperwork within 45 days, you can report them to the Department of Labor, who will fine them severely.

Also, don’t worry about Affordable Care Act/Obamacare penalties. As long as your gap in coverage is less than two calendar months in a single year, there is no tax penalty for that gap.

Alternatives to COBRA

COBRA is expensive, so it pays to wait to see if you’re going to need it. Paying out of pocket for a few things is likely to be cheaper than carrying COBRA–and you have a few options there. Getting coverage through one of the health exchanges is likely to be cheaper too. But you have a little time to figure that out.

It would have been nice if that paper I got in the mail promising the paperwork was in the mail would have said all of this. Then again, nobody asked me. Well, I guess you just did. I also couldn’t find anything online that talked about the options, so I wrote this. I hope it helps you save a little money and get some more peace of mind.

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