How To Bill For COBRA Premiums

Billing for COBRA premiums involves a formal and consistent process that complies with federal regulations while ensuring that qualified beneficiaries understand their payment obligations.

• Set the COBRA Premium Rate Employers can charge the full cost of the health insurance premium, plus a 2% administrative fee (in other words, 102% of the total premium. For disability extensions (months 19–29), employers may charge up to 150% of the total premium as governed by labor law.
• Send the COBRA Election Notice Before billing, employers (or the plan administrator) must send a COBRA election notice, which must include:
  • The amount of the monthly premium
    • When payments are due
    • Where to send payment
    • Grace periods
    • Consequences of late or missed payments
  • Track the Election and First Payment Window Once a beneficiary elects COBRA, they have 45 days from the date of election to make the first premium payment (covering all months retroactive to the loss of coverage). For an HR Generalist, maintaining this timeline is essential for human resources compliance.Bill Monthly Premiums After the first payment, send monthly invoices showing the coverage period, the amount due for that period, the due date, the grace period, payment instructions (mailing address, online payment portal, etc.), and contact info for questions.
  • Accept and Track Payments Use a reliable system to track incoming payments and flag late or missed payments. If medical information is involved in the billing process, HIPAA privacy standards apply.
  • Send Notices for Missed Payments or Termination If COBRA is terminated early, send a COBRA termination notice explaining the reason for termination, the effective date of loss of coverage, and any rights to other coverage.
  Note: This is an excerpt from our COBRA Training & Certification Program.