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.
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