The Qualified Beneficiary (QB) has 60 days to elect or decline COBRA coverage. That 60-day clock starts running from the date the Qualifying Event Notice was provided, or the date active coverage ended (whichever is later).
Paying for COBRA
Once a QB says yes to the coverage, he or she has 45 days to pay the first premium, and the payment must include all retroactive premiums to the start date of COBRA. After the initial premium payment is sent in, the member has a 30-day grace period to pay subsequent monthly premiums. For example, for April coverage, he would have until April 30th to remit premium.
What if the person pays less than what they owe for COBRA? You have to send them a notice of the underpayment and allow them 30 days from the date of your letter to pay up.
Cost of COBRA
COBRA members must pay the full cost of coverage. You can charge an additional 2% to cover administrative costs. If you are using a COBRA vendor, they will typically charge that 2% fee and retain it for their services. COBRA premiums are linked to your active employee health plans. If you receive an increase or decrease in your rates, your COBRA members will also be affected by these changes.
If the member stops paying their COBRA premium, obviously their coverage will end. It will also end if your group health plan terminates altogether (if not replaced with another group-based plan), the member begins coverage under another group health plan (if no pre-existing condition waiting periods apply), or the member becomes entitled to Medicare after enrolling on COBRA.