No, COBRA coverage does not qualify as eligible individual health insurance for ICHRA participation, so employees with COBRA must enroll in a separate individual health plan to receive tax-free reimbursements.
Can you participate in ICHRA with COBRA coverage?
COBRA is not eligible for ICHRA participation
COBRA is considered a continuation of a former employer’s group health plan. Because of this:
❌ COBRA is not treated as individual health insurance
❌ COBRA does not meet ICHRA eligibility requirements
❌ Employees with COBRA cannot receive ICHRA reimbursements while only enrolled in COBRA
Under IRS rules for ICHRAs, reimbursement is only allowed for qualified individual coverage, not group continuation coverage.
What you must do to become eligible for ICHRA
You must enroll in an individual health insurance plan
To participate in an ICHRA and receive reimbursements, you must:
Enroll in a qualifying individual health insurance plan
Ensure the plan meets ACA and federal requirements
Submit proof of active enrollment in that plan
Waive or discontinue COBRA coverage if required for your situation
Once these steps are completed:
✔ You may become eligible for tax-free reimbursement under your ICHRA