Question of the Week - Notice of COBRA Rate Increase

Posted by BAS - 28 September, 2023


Q.- We heard that we need to tell COBRA participants of a rate change at least 30 days before the change goes into effect. Is that correct?

A.- We are not aware of any requirement under federal COBRA rules that would make a plan provide 30 days advance notice of a COBRA premium increase.

The COBRA premium may change only once every 12 months and must be set before the 12-month period begins. A plan should give timely notice of a premium rate change, but neither the COBRA statute nor the DOL COBRA regulations provide guidance on what timely means.

If a continuant pays the plan using the prior premium rate and that rate is incorrect, but not significantly less than the amount due, the plan must notify the continuant of the deficiency and grant a reasonable period of time to pay the difference. If the premium rate change was significant (so the reasonable period of time to correct did not apply), it is likely that a court would not look kindly on an employer who terminated COBRA coverage due to the underpayment if the participant was not notified of the new premium rate.

Benefit Allocation Systems (BAS) provides best-in class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).

Topics: COBRA, HR & Benefits Compliance, COBRA Administration, health insurance coverage

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