The Con­sol­i­dat­ed Omnibus Bud­get Rec­on­cil­i­a­tion Act of 1985 (COBRA) allows qual­i­fied ben­e­fi­cia­ries who lose health ben­e­fits due to a qual­i­fy­ing event to con­tin­ue group health ben­e­fits. The COBRA pay­ment process is sub­ject to var­i­ous rules in terms of grace peri­ods, noti­fi­ca­tion, pre­mi­um pay­ment meth­ods, and treat­ment of insignif­i­cant shortfalls.

Grace Peri­ods

The ini­tial pre­mi­um pay­ment is due 45 days after the qual­i­fied ben­e­fi­cia­ry elects COBRA. Pre­mi­um pay­ments must be made on time; oth­er­wise, a plan may ter­mi­nate COBRA cov­er­age. Gen­er­al­ly, sub­se­quent pre­mi­um pay­ments are due on the first day of the month. How­ev­er, under the COBRA grace peri­od rules, pre­mi­ums will still be con­sid­ered time­ly if made with­in 30 days after the due date. The statu­to­ry grace peri­od is a min­i­mum 30-day peri­od, but plans may allow qual­i­fied ben­e­fi­cia­ries a longer grace period.

A COBRA pre­mi­um pay­ment is made when it is sent to the plan. Thus, if the qual­i­fied ben­e­fi­cia­ry mails a check, then the pay­ment is made on the date the check was mailed. The plan admin­is­tra­tors should look at the post­mark date on the enve­lope to deter­mine whether the pay­ment was made on time. Qual­i­fied ben­e­fi­cia­ries may use cer­ti­fied mail as evi­dence that the pay­ment was made on time.

The 30-day grace peri­od applies to sub­se­quent pre­mi­um pay­ments and not to the ini­tial pre­mi­um pay­ment. After the ini­tial pay­ment is made, the first 30-day grace peri­od runs from the pay­ment due date and not from the last day of the 45-day ini­tial pay­ment period.

If a COBRA pay­ment has not been paid on its due date and a fol­low-up billing state­ment is sent with a new due date, then the plan risks estab­lish­ing a new 30-day grace peri­od that would begin from the new due date.


The plan admin­is­tra­tor must noti­fy the qual­i­fied ben­e­fi­cia­ry of the COBRA pre­mi­um pay­ment oblig­a­tions in terms of how much to pay and when pay­ments are due; how­ev­er, the plan does not have to reno­ti­fy the qual­i­fied ben­e­fi­cia­ry to make time­ly pay­ments. Even though plans are not required to send billing state­ments each month, many plans send reminder state­ments to the qual­i­fied beneficiaries.

While the only require­ment for plan admin­is­tra­tors is to send an elec­tion notice detail­ing the plan’s pre­mi­um dead­lines, there are three cir­cum­stances under which writ­ten notices about COBRA pre­mi­ums are nec­es­sary. First, if the COBRA pre­mi­um changes, the plan admin­is­tra­tor must noti­fy the qual­i­fied ben­e­fi­cia­ry of the change. Sec­ond, if the qual­i­fied ben­e­fi­cia­ry made an insignif­i­cant short­fall pre­mi­um pay­ment, the plan admin­is­tra­tor must pro­vide notice of the insignif­i­cant short­fall unless the plan admin­is­tra­tor choos­es to ignore it. Last, if a plan admin­is­tra­tor ter­mi­nates a qual­i­fied ben­e­fi­cia­ry’s COBRA cov­er­age for non­pay­ment or late pay­ment, the plan admin­is­tra­tor must pro­vide a ter­mi­na­tion notice to the qual­i­fied beneficiary.

The plan admin­is­tra­tor is not required to inform the qual­i­fied ben­e­fi­cia­ry when the pre­mi­um pay­ment is late. Thus, if a plan admin­is­tra­tor does not receive a pre­mi­um pay­ment by the end of the grace peri­od, then COBRA cov­er­age may be ter­mi­nat­ed. The plan admin­is­tra­tor is not required to send a notice of ter­mi­na­tion in that case because the COBRA cov­er­age was not in effect. On the oth­er hand, if the qual­i­fied ben­e­fi­cia­ry makes the ini­tial COBRA pre­mi­um pay­ment and cov­er­age is lost for fail­ure to pay with­in the 30-day grace peri­od, then the plan admin­is­tra­tor must pro­vide a notice of ter­mi­na­tion due to ear­ly ter­mi­na­tion of COBRA coverage.

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