COBRA's election and payment timelines are strict, specific, and among the most litigated parts of benefits administration. Most disputes turn on dates — when a notice was sent, when an election was made, when a payment was postmarked — which makes this an area where documentation matters more than judgment.
A qualified beneficiary must be given an election period of at least 60 days to decide whether to continue coverage. That period runs from the later of the date coverage would be lost or the date the election notice is provided.
Two features catch administrators out.
Each qualified beneficiary has an independent right to elect. A spouse and each dependent child may elect separately, and one family member's decision does not bind another. Plans that treat the employee's election as covering the family are getting this wrong.
An election can be revoked and re-made within the election period. A beneficiary who waives coverage may revoke that waiver before the period ends, though coverage then typically begins from the date the waiver was revoked rather than retroactively.
Election does not activate coverage — payment does. A qualified beneficiary generally has 45 days from the date of election to make the first premium payment.
That first payment must cover the period back to the date coverage was lost, which can be a substantial sum. Coverage is retroactive to the qualifying event once paid, and plans may suspend coverage in the interim provided it is reinstated retroactively upon payment.
After the initial payment, premiums are typically due monthly, with a grace period of at least 30 days from the due date. Payment made within the grace period is timely.
If payment is not made by the end of the grace period, coverage may be terminated — but the plan must be able to demonstrate that the grace period was correctly calculated and that the termination notice requirements were met.
Payment is generally treated as made on the date it is sent, not the date it is received. A payment postmarked on the final day of the grace period is timely even if it arrives a week later. Administrators who terminate on receipt date rather than postmark date create a straightforward compliance failure.
Where a payment falls short by an amount that is not significant, the plan must either accept it as full payment or notify the beneficiary of the shortfall and allow a reasonable period to pay it. Terminating coverage over a small underpayment without that notice is a recurring source of claims.
Keep, for every qualified beneficiary: the qualifying event and its date, the date the election notice was generated and the method of delivery, the election received and its date, the payment history with postmark evidence, and any correspondence about shortfalls or grace periods.
Because these disputes surface long after the event, the file has to speak for itself.
The two situations that generate the most disputes are payments arriving near the end of a grace period and payments that are slightly short.
For the first, the governing date is when the payment was sent rather than when it arrived. Retain envelopes or electronic timestamps where payment is close to the deadline, because the evidence determines the outcome.
For the second, an insignificant shortfall cannot simply be rejected. The plan must either accept it as full payment or notify the beneficiary and allow a reasonable period to make it up. Building that notice into the process removes the judgment call.
A second qualifying event during a continuation period can extend coverage for qualified beneficiaries in defined circumstances — a divorce or a child ceasing to be a dependent during an existing continuation period, for example.
These extensions depend on the beneficiary notifying the plan within the stated timeframe, which means the original election notice needs to explain that obligation clearly. Plans that do not explain it end up disputing whether notice was required.
Coverage may be suspended pending payment, provided it is reinstated retroactively once timely payment is made.
No — from the date of election.
Plans may generally charge up to 102% of the applicable premium, with a higher percentage permitted during a disability extension.
Coverage need not be provided. The election alone does not create coverage.
See also employer requirements under COBRA and how to bill for COBRA premiums. For full administration, see the COBRA training and certification program.
Recommended Online Training Courses
1-770-410-1219
support@HRTrainingCenter.com
770-410-1219
