Can employer reimburse my previous COBRA payments tax-free even before my start date?

7 You're asking a good question about COBRA reimbursements! Employers can reimburse COBRA premiums tax-free, but there are specific requirements to make this work. The key is having the reimbursement structured as part of a proper health plan arrangement. Your new employer would need to set this up as part of their health plan, possibly through what's called an HRA (Health Reimbursement Arrangement) or similar qualified arrangement. If done correctly, the reimbursement can be excluded from your taxable income. However, if they just cut you a check without the proper structure, it would likely be considered taxable compensation. The timing is tricky though - typically these arrangements cover expenses while you're an employee, not expenses from before your start date. That's where you might run into complications.

15 After struggling with almost the exact same situation (had about $13k in COBRA payments before starting my new job), I found an amazing resource called taxr.ai at https://taxr.ai that specifically analyzed my employment offer and COBRA situation. I uploaded my COBRA statements and the draft offer letter, and their system identified that my offer needed specific language about "qualifying healthcare expenses" to make the reimbursement tax-free. My new employer was actually willing to modify the offer letter based on the guidance from taxr.ai, and I ended up with a properly structured reimbursement that didn't count as taxable income. The employer's HR team hadn't initially set it up correctly, but the specific recommendations from the analysis made it work for both parties.

18 Just wanted to follow up - I decided to check out taxr.ai after posting my question above. I uploaded my COBRA statements and draft offer letter, and the analysis was really eye-opening. It showed that my employer's proposed language would have made the reimbursement fully taxable, but recommended specific changes to make it qualify as a tax-free health benefit. I brought the suggestions to the negotiation table, and while my employer's HR team was initially confused, they consulted their benefits attorney who confirmed everything was legitimate. We rewrote that section of the offer, and I'm getting my $22k in COBRA payments reimbursed completely tax-free! Definitely worth checking out if you're in a similar situation.

9 After reading this thread, I wanted to share something that helped me with a different but related issue. I had been trying to get clarification from the IRS about a complex COBRA reimbursement situation for WEEKS with no luck. I kept calling the IRS support line but couldn't get through to a human. Then I found this service called Claimyr at https://claimyr.com that got me connected to an actual IRS agent within about 20 minutes. I was skeptical at first, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically navigate the IRS phone tree for you and then call you when they've gotten through to a real person. The IRS agent I spoke with confirmed that employer COBRA reimbursements can indeed be tax-free if structured correctly through a qualified arrangement, and gave me the specific publication numbers to reference during my negotiation.

3 I was really skeptical about Claimyr when I first read about it here (seemed like it couldn't possibly work), but I was desperate after spending literally hours trying to get someone at the IRS to clarify my COBRA reimbursement question. I decided to give it a try, and honestly, I was shocked when I got a call back about 15 minutes later with an actual IRS representative on the line. The agent walked me through how employer health premium reimbursements are treated for tax purposes and confirmed that with the right documentation and plan structure, they can be excluded from income. This was exactly the confirmation I needed to move forward with confidence in my negotiation. Saved me from potentially paying taxes on nearly $17k of reimbursements. Sometimes it's worth trying things that seem too good to be true!

5 Just to add another perspective - I was in a similar situation last year and negotiated for my new employer to cover my COBRA costs. In my case, they just added it to my signing bonus and it was absolutely taxable. I ended up with about 65% of the actual COBRA costs after taxes. If I could do it over again, I would have asked for a specific health expense reimbursement arrangement instead. My tax advisor later told me this could have been structured better with the right benefit plan documentation.

25 Has anyone actually had success getting a company to reimburse COBRA from before you even worked there? This seems like a stretch to me. Most companies I've dealt with barely want to negotiate standard benefits let alone create special arrangements.

I've been following this discussion with great interest since I'm dealing with a similar situation. After reading through all the responses, I'm curious about the practical implementation. For those who successfully got tax-free reimbursements, how long did it take your employers to set up the proper arrangements? And did you have to provide specific documentation beyond just the COBRA payment receipts? I'm particularly interested in whether smaller companies (under 100 employees) have the same flexibility to create these special health reimbursement arrangements, or if this is mainly something larger corporations with dedicated benefits teams can handle. My potential employer is a smaller firm and I'm wondering if I should adjust my expectations accordingly.

This is such a helpful thread! I'm in a similar boat with about $14k in COBRA payments from a 4-month gap. Based on what I'm reading here, it sounds like the key is getting the employer to structure this as a qualified health reimbursement rather than just adding it to my salary. For anyone who's been through this process - did you find that having specific tax code references helped when negotiating? I'm thinking about mentioning Publication 15-B upfront to show I've done my homework. Also wondering if there's a typical timeline employers need to set up these arrangements, since my start date is coming up in about 6 weeks. The taxr.ai suggestion is intriguing too - might be worth uploading my documents to see what specific language issues they identify before I go into final negotiations.

I've been researching this exact scenario for a client situation, and there are a few important considerations beyond what's been mentioned here. While employer reimbursements for COBRA premiums can indeed be tax-free when structured properly, the timing element creates some complexity. The IRS generally requires that health reimbursement arrangements cover expenses incurred while you're eligible for the plan. However, there's some flexibility under Section 105 plans where employers can reimburse qualifying medical expenses that occurred during a "transition period" if properly documented. One approach I've seen work is having the employer establish the health reimbursement arrangement effective on your hire date, but with specific language allowing reimbursement for qualifying health premiums paid during the immediate pre-employment gap period (typically limited to 3-6 months). This requires careful drafting to ensure compliance. The key is getting this structured before you start work - it's much harder to retrofit these arrangements after the fact. I'd recommend having this conversation early in your negotiation process and being prepared to provide detailed documentation of your COBRA payments and coverage dates.

I'm dealing with a very similar situation and this thread has been incredibly enlightening! I have about $16k in COBRA payments from a 5-month gap between jobs, and I'm currently in final negotiations with my new employer. Based on what I'm reading here, it sounds like the magic is in getting the language right in the offer letter to establish this as a qualified health benefit rather than taxable compensation. I'm particularly interested in the Section 105 plan approach that Sean mentioned - that "transition period" concept seems like exactly what I need. My question is about implementation timing: if I get the right language in my offer letter this week, how quickly can most companies actually process the reimbursement once I start? I'm hoping to get these COBRA costs off my credit card sooner rather than later. Also, for those who successfully negotiated this, did you find that having a specific dollar amount helped or hurt during negotiations? I'm wondering if I should present it as a lump sum or break it down by monthly COBRA payments. The taxr.ai tool sounds promising too - might upload my documents tonight to see what specific language gaps they identify before my final negotiation call tomorrow.

As someone who went through a similar situation with COBRA reimbursements, I wanted to share a few practical tips that might help others navigating this process. First, timing is absolutely critical - you need to get the right language in your offer letter before signing, not after you start. I learned this the hard way when my first employer just treated it as taxable income because we didn't establish the proper framework upfront. Second, be prepared to educate your employer's HR team. Many smaller companies haven't dealt with Section 105 health reimbursement arrangements before, so having specific references to IRS publications (like Pub 15-B) and being able to explain how it benefits both parties really helps move the conversation forward. Third, document everything meticulously. Keep all your COBRA election notices, payment confirmations, and bank statements organized. The IRS requires proper documentation for these arrangements, and having everything ready shows you're taking this seriously. Finally, consider the company's size and benefits sophistication when setting expectations. Larger companies with dedicated benefits teams can usually handle these arrangements more easily, while smaller firms might need more time and hand-holding but often have more flexibility to make quick decisions. The key is framing this as a legitimate health benefit transition rather than trying to avoid taxes on what would otherwise be compensation. When positioned correctly, most employers are surprisingly receptive to helping with healthcare continuity.