Who Pays for COBRA and When are Payments Due?

Employers are not required to make any contribution toward COBRA continuation coverage, even if the employer made a contribution prior to the individual’s loss of benefits.  Although an employer has no legal obligation to subsidize any part of the COBRA premium, an employer may voluntarily choose to pay part or all of the premium.

The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary.  Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event.  Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments.  Payment is considered to be made on the date it is sent to the plan. If premiums are not paid by the first day of the period of coverage, the plan has the option to cancel coverage until payment is received and the reinstate coverage retroactively to the beginning of the period of coverage.

If a qualified beneficiary underpays the premium by an insignificant amount, the plan must either accept the amount as payment in full or seek the rest of the payment.  Before cancelling the qualified beneficiary’s COBRA coverage for underpaying by an insignificant amount, the plan must send a notice to the qualified beneficiary and give them at least a 30-day grace period from the date of the notice to pay the balance of the premium.

After the initial premium payment, subsequent premiums are considered to be timely if made by the due date established by the plan or within a grace period of 30 days.  A plan must allow beneficiaries to pay premiums on a monthly basis.