Most COBRA coverage disputes start as a premium payment nobody reconciled.
A check that is late, short or applied to the wrong month does not look like a problem until a claim is denied months later. We set up premium billing and collection so each payment is measured against the rules the day it arrives, and we bill retirees and other continuants outside COBRA the same way.
The grace periods are generous. The records have to be exact.
COBRA premiums can be up to 102% of the plan’s cost, or 150% during a disability extension, and the payment rules favor the beneficiary. The employer’s protection is a clean record.
The First Payment
The initial premium cannot be required earlier than 45 days after the election, and it can cover every month back to the loss of coverage. A late election paid late can still be on time, which is why we track both dates, not just the check. Our free COBRA subsidy cost calculator turns this into dollars for your plan.
The Monthly Grace Period
Each later payment is timely if made within 30 days after the first day of the coverage period. We apply each payment to a named period, so there is never a question which month a check was meant to cover.
Short Payments
A payment short by no more than the lesser of $50 or 10% of the amount due is treated as full payment unless the plan sends notice and allows 30 days to cure. We send that notice promptly, because silence turns the shortfall into a gift.
Rate Changes
COBRA rates follow the plan’s rates and usually change at renewal. We update billing when the plan year turns over, so beneficiaries are billed the new rate from the first month rather than corrected later. Accurate COBRA premium billing starts with current plan rates.
Terminating for non-payment has to be as timely as the payment rules are generous.
When the grace period ends without payment, coverage can end back to the start of the unpaid period. The dispute comes when claims keep getting paid after that date because the carrier or claims payer was never told.
Tell the Carrier on Time
We send the termination to the carrier or claims payer as soon as the grace period closes. A late termination leaves claims paid for someone no longer covered, and recovering them is harder than preventing them. Timely COBRA terminations protect the plan from paying claims it does not owe.
Hold Claims During Grace
Claims incurred during a grace period can be held until payment arrives rather than paid and reversed. We coordinate that practice with the carrier, so providers get one consistent answer. Holding claims during the COBRA grace period avoids the paperwork of reversing claims that were paid for someone who later lapses.
Reconcile Every Month
We reconcile collections against enrollment and against what the carrier or claims payer billed each month, so the premium collected matches the people covered and gaps surface in weeks, not at year-end. Monthly COBRA premium reconciliation keeps collections, enrollment and the carrier bill in agreement.
Retirees and other continuants need the same discipline without the same rules.
Direct billing outside COBRA follows your plan’s terms, not the federal timeline. That makes the written terms more important, not less.
Retiree Contributions
Retirees who pay their share are billed on the schedule your retiree policy sets. We make sure the policy says what happens when a payment is late, because a rule written after the first missed payment looks arbitrary. Clear retiree contribution billing rules protect the employer as much as the retiree.
Unpaid Leave
Employees on unpaid leave who keep coverage still owe their share. We bill them directly on terms you set, so leave does not quietly become free coverage or an unexpected termination. A written unpaid leave billing policy keeps benefits continuation on leave consistent from one employee to the next.
The Move to Medicare
Continuants and retirees who become eligible for Medicare often need something different from the plan. We flag those dates so billing and coverage change together rather than a month apart. Coordinating the move to Medicare avoids both a coverage gap and a month of duplicate premium.
What employers ask about COBRA billing.
Can we charge less than the maximum?
Yes. Many employers charge less than the 102% ceiling or subsidize COBRA in a severance package. It should be a decision made on purpose and written down, because it sets an expectation for the next departure. A written COBRA subsidy policy keeps severance terms consistent.
What if a payment arrives after the grace period?
Coverage has ended, and accepting the late payment can be read as reinstating it. We return late payments under a written procedure, and any exception is decided with counsel. A consistent late payment policy protects the plan in any COBRA dispute.
How do we know where the money went?
Every payment is recorded against a named beneficiary and period and reconciled monthly to enrollment and to the carrier’s bill. You see each payment’s path, not a single remittance total. Clear COBRA payment records make any beneficiary question quick to answer.
What is the most we can charge?
Up to 102% of the cost of coverage for similarly situated active employees, which is the full premium including the employer’s share, plus 2% for administration. During the 11-month disability extension it can be up to 150%.
Can people pay monthly?
Yes. The plan must allow monthly payment if the person asks, and may offer other intervals such as weekly or quarterly.
How long do they have to make the first payment?
At least 45 days after they elect. The plan cannot require payment at the time of election, and it can end COBRA rights if nothing is paid by the end of that period.
What if a payment is slightly short?
If it is not significantly short, the plan must tell the person about the shortfall and give a reasonable period to pay the difference. Thirty days is considered reasonable.
Can the premium go up during the year?
Plans must generally set the premium before each 12-month cycle. It can rise if the plan’s cost rises, such as at renewal.
What is the grace period on later payments?
At least 30 days for each payment. The plan may hold coverage until payment arrives and reinstate it back to the start of the period. See every COBRA deadline.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
COBRA Continuation Coverage (29 U.S.C. 1161)
Requires many group health plans to offer temporary continuation coverage after a qualifying event.
Family and Medical Leave Act (29 U.S.C. Chapter 28)
Job-protected leave and group health coverage continuation for eligible employees.
Plan Reporting (29 CFR Part 2520)
The Department of Labor rules for annual plan reports, including Form 5500.
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