Beneficiaries may be required to pay for COBRA coverage. The premium
cannot exceed 102 percent of the cost to the plan for similarly situated
individuals who have not incurred a qualifying event, including both
the portion paid by employees and any portion paid by the employer before
the qualifying event, plus 2 percent for administrative costs.
For qualified beneficiaries receiving the 11 month disability extension
of coverage, the premium for those additional months may be increased
to 150 percent of the plan's total cost of coverage.
COBRA premiums may be increased if the costs to the plan increase
but generally must be fixed in advance of each 12-month premium cycle.
The plan must allow you to pay premiums on a monthly basis if you ask
to do so, and the plan may allow you to make payments at other intervals
(weekly or quarterly).
The initial premium payment must be made within 45 days after the
date of the COBRA election by the qualified beneficiary. Payment generally
must cover the period of coverage from the date of COBRA election retroactive
to the date of the loss of coverage due to the qualifying event. Premiums
for successive periods of coverage are due on the date stated in the
plan with a minimum 30-day grace period for payments. Payment is considered
to be made on the date it is sent to the plan.
If premiums are not paid by the first day of the period of coverage,
the plan has the option to cancel coverage until payment is received
and then reinstate coverage retroactively to the beginning of the period
If the amount of the payment made to the plan is made in error but
is not significantly less than the amount due, the plan is required
to notify you of the deficiency and grant a reasonable period (for this
purpose, 30 days is considered reasonable) to pay the difference. The
plan is not obligated to send monthly premium notices.
COBRA beneficiaries remain subject to the rules of the plan and therefore
must satisfy all costs related to co-payments and deductibles, and are
subject to catastrophic and other benefit limits.
When you were an active employee, your employer may have paid all
or part of your group health premiums. Under COBRA, as a former employee
no longer receiving benefits, you will usually pay the entire premium
amount, that is, the portion of the premium that you paid as an active
employee and the amount of the contribution made by your employer. In
addition, there may be a 2 percent administrative fee.
While COBRA rates may seem high, you will be paying group premium
rates, which are usually lower than individual rates.
Since it is likely that there will be a lapse of a month or more between
the date of layoff and the time you make the COBRA election decision,
you may have to pay health premiums retroactively-from the time of separation
from the company. The first premium, for instance, will cover the entire
time since your last day of employment with your former employer.
You should also be aware that it is your responsibility to pay for COBRA
coverage even if you do not receive a monthly statement.
Although they are not required to do so, some employers may subsidize
More information visit: http://consumerlawpage.com/brochure/cobra.shtml