It was still taxable income to you (and an expense to them).
Even though you directed that payment go to your Cobra insurance provider, the insurance was a personal benefit to you paid for by funds made available to you from your former employer.
You want to make sure you enter the Form 1099-MISC so it is not treated as self-employment income. If you are using a TurboTax product, it gets entered as "Other Common Income > Income from Form 1099-MISC".
Make sure you answer the interview questions to show that it was:
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not related to your job;
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not related to your work;
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a one-time payment (you never got in the past and don't expect in the future and;
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no intent to earn money or make a profit.
