Research · 7 min read
The COBRA Election Window, and the Payment Clock Behind It
Sixty days to elect, forty-five days from the election to make the first payment, and thirty days for each payment after that. The dates run from different events, which is why the deadlines are so easy to misread.
Key takeaways
- The election period must run at least 60 days from the later of the loss of coverage or the notice of the right to elect.
- A plan cannot require the first payment earlier than 45 days after the election; later payments are timely if made within 30 days after the first day of the period.
- Elections, waivers, revocations and payments are all treated as made on the date they are sent to the plan.
- Each qualified beneficiary has an independent election, and a covered employee cannot decline continuation coverage on a spouse's behalf.
- The charge is capped at 102 percent of the applicable premium, or 150 percent for the portion of coverage available only because of a disability extension.
- Coverage ends at the earliest of the listed events, including the first day for which timely payment is not made, and termination for cause is allowed only on the same basis applied to similarly situated non-COBRA participants.
Answer first: three clocks, none of which starts on the same day
The election period is defined by the later of two dates. The Treasury regulation states that it "must begin not later than the date the qualified beneficiary would lose coverage on account of the qualifying event" and "must not end before the date that is 60 days after the later of" the date coverage would be lost or "the date notice is provided to the qualified beneficiary of her or his right to elect COBRA continuation coverage."
The statute says the same thing: the election period begins not later than the date coverage terminates by reason of a qualifying event, is of at least 60 days' duration, and ends not earlier than 60 days after the later of that date or the date of the required notice.
The first payment is on a different clock entirely. The payment regulation provides that "a plan cannot require payment for any period of COBRA continuation coverage for a qualified beneficiary earlier than 45 days after the date on which the election of COBRA continuation coverage is made." That 45 days runs from the election, not from the qualifying event and not from the notice.
Subsequent payments run on a third clock. "Timely payment for a period of COBRA continuation coverage under a group health plan means payment that is made to the plan by the date that is 30 days after the first day of that period," subject to longer periods the plan or an insurer arrangement may allow.
One rule ties them all together: "Payment is considered made on the date on which it is sent to the plan." The same principle applies to elections — "an election is considered to be made on the date it is sent to the plan administrator" — and to waivers and revocations of waivers.
What happens during the 60 days, before anyone has elected
The regulation is explicit that coverage during the election period has to be dealt with, and it gives plans two ways to do it. In an indemnity or reimbursement arrangement, the plan can provide coverage during the election period, or it can terminate the qualified beneficiary's coverage and reinstate it when the election, and any required payment, is made. Claims incurred during the election period "do not have to be paid before the election (and, if applicable, payment for the coverage) is made."
What the plan cannot do is give a health care provider an incomplete answer. If a provider contacts the plan to confirm coverage during the election period, "the plan must give a complete response to the health care provider about the qualified beneficiary's COBRA continuation coverage rights during the election period." The regulation gives both scripts: a plan that covers during the election period but cancels retroactively must say the beneficiary is covered subject to retroactive termination, and a plan that cancels and reinstates must say the beneficiary currently does not have coverage but will have it retroactively if coverage is elected.
There is a parallel obligation once coverage has been elected but payment has not yet arrived. During the 30-day and 45-day grace periods, a plan must likewise give a provider a complete response about the beneficiary's rights, including whether coverage is subject to retroactive termination or retroactive reinstatement.
A waiver signed during the election period does not close the door. "If, during the election period, a qualified beneficiary waives COBRA continuation coverage, the waiver can be revoked at any time before the end of the election period," and revoking the waiver is itself an election. The regulation adds one consequence: where a waiver is later revoked, "coverage need not be provided retroactively" for the stretch between the loss of coverage and the revocation.
The plan may not use leverage to force the decision. An employer or employee organization "must not withhold anything to which a qualified beneficiary is otherwise entitled (by operation of law or other agreement) in order to compel payment for COBRA continuation coverage or to coerce the qualified beneficiary to give up rights," including the right to use the full election period. Any purported waiver obtained that way is invalid.
Each person gets their own election
The regulation states it as a yes-or-no question with a one-word answer. "Can each qualified beneficiary make an independent election under COBRA? Yes." Each qualified beneficiary — including a child born to or placed for adoption with a covered employee during a period of continuation coverage — must be offered the opportunity to make an independent election.
The independence runs in one direction only. If a qualified beneficiary who is the covered employee or the employee's spouse elects and does not specify whether the election is for self-only coverage, "the election is deemed to include an election of COBRA continuation coverage on behalf of all other qualified beneficiaries with respect to that qualifying event." But an employee cannot decline on a spouse's behalf: the regulation's own example states that if the employee does not elect for the spouse, "the spouse must still be allowed to elect."
The statute captures the same asymmetry, deeming an election by certain qualified beneficiaries to include an election for others who would lose coverage, while providing that where there is a choice among types of coverage, "each qualified beneficiary is entitled to make a separate selection among such types of coverage."
Open enrollment rights carry over. If the plan lets similarly situated active employees choose among several options during an open enrollment period, each qualified beneficiary must also be offered an independent election among those same options.
How a person's coverage was paid for before the qualifying event does not matter. The regulation's second example makes the point directly: where an employee funded part of family coverage through a cafeteria plan with before-tax dollars and part with after-tax dollars, each qualified beneficiary must still be offered an election "regardless of how that qualified beneficiary's coverage was paid for before the qualifying event."
What the plan may charge, and when it may raise it
The cap is a percentage, not a dollar figure. "For any period of COBRA continuation coverage, a group health plan can require the payment of an amount that does not exceed 102 percent of the applicable premium for that period." For a period covering a disabled qualified beneficiary that would not be required to be made available absent the disability extension, the cap rises to 150 percent — and the regulation is careful that the higher figure applies only to the extended stretch, not retroactively to coverage the beneficiary was entitled to anyway.
The applicable premium is fixed in advance. It "must be computed and fixed by a group health plan before the determination period begins," where a determination period is any 12-month period the plan selects and applies consistently from year to year, as a single period for any benefit package.
Mid-period increases are limited to three situations: the plan had been charging less than the maximum permitted and the increase stays within the maximum; the increase occurs during the disability extension and stays within that maximum; or the qualified beneficiary changes the coverage being received.
Two more mechanics are worth knowing. A plan "must allow payment for COBRA continuation coverage to be made in monthly installments," though it may also offer other intervals. And a plan is not required to let a qualified beneficiary apply the first payment prospectively only — it may apply that payment to the period of coverage beginning immediately after coverage would have been lost.
There is a tolerance for small shortfalls. If timely payment is made in an amount "not significantly less than" what the plan requires, the amount paid is deemed to satisfy the requirement unless the plan notifies the beneficiary of the deficiency and grants a reasonable period to cure it — with 30 days after the notice treated as a safe harbor. A shortfall is not significant only if it is no greater than the lesser of $50, or such other amount as the Commissioner may publish, or 10 percent of the amount required.
How the coverage ends
The duration regulation lists the termination points. Elected continuation coverage must extend from the date of the qualifying event until no earlier than the earliest of: the last day of the maximum coverage period; the first day for which timely payment is not made; the date the employer or employee organization ceases to provide any group health plan, including successor plans, to any employee; the date after the election on which the qualified beneficiary first becomes covered under any other group health plan; the date after the election on which the beneficiary first becomes entitled to Medicare benefits; and, for a beneficiary entitled to a disability extension, a date computed under the rule the regulation sets out.
That disability rule is the intricate one. It runs to the later of the maximum coverage period without regard to the extension, or the earlier of 29 months after the qualifying event and the first day of the month more than 30 days after a final Social Security determination that the disabled qualified beneficiary is no longer disabled.
Termination for cause is permitted, but only on equal terms. A plan can terminate a qualified beneficiary's coverage for cause "on the same basis that the plan terminates for cause the coverage of similarly situated nonCOBRA beneficiaries" — the regulation's example is submitting a fraudulent claim. And the regulation adds a limit: coverage may be terminated for failure to make timely payment "only if payment is not timely under the rules" of the payment section.
The eighteen-month figure people quote appears inside the election regulation's own worked example, which states that in each of the three cases it describes, "COBRA continuation coverage need not be provided for more than 18 months after the termination of employment," and that in certain circumstances it might be provided for a shorter period.
One structural point runs through all of it. The plan's obligations here are stated as conditions the plan must satisfy, and each deadline is defined relative to a specific triggering event. Whether a particular person's dates fall inside those windows is determined by the plan administrator on that person's record.
Sources
- 26 CFR § 54.4980B-6 — Electing COBRA continuation coverageThe definition and minimum duration of the election period; the rule that an election is made on the date it is sent; the treatment of coverage during the election period and the duty to give providers a complete response; the revocability of a waiver and the absence of a retroactive coverage obligation on revocation; the prohibition on withholding anything owed to compel payment or coerce a waiver; the independent election of each qualified beneficiary and the deemed election for others; the open enrollment parallel; the irrelevance of how coverage was previously paid for; and the statement in its worked example that continuation coverage need not be provided for more than 18 months after termination of employment.
- 26 CFR § 54.4980B-7 — Duration of COBRA continuation coverageThe list of dates at which continuation coverage may end, including the maximum coverage period, the first day for which timely payment is not made, cessation of any group health plan, later coverage under another group health plan, later Medicare entitlement, and the disability extension computation; the rule permitting termination for cause on the same basis as for similarly situated non-COBRA beneficiaries; and the limitation that termination for nonpayment requires that payment be untimely under the payment section's rules.
- 26 CFR § 54.4980B-8 — Paying for COBRA continuation coverageThe 102 percent and 150 percent caps and the limits on applying the higher cap; the requirement that the applicable premium be computed and fixed before the determination period begins and the definition of that period; the three permitted mid-period increases; the requirement to allow monthly installments; the rule that a plan may apply the first payment to the period beginning immediately after coverage would have been lost; the 30-day timeliness rule and the 45-day floor after election; the duty to give providers a complete response during grace periods; the insignificant-shortfall safe harbor with its $50 and 10 percent limits and 30-day cure period; and the rule that payment is considered made on the date it is sent.
- 29 U.S.C. § 1165 — ElectionThe statutory definition of the election period — beginning no later than the date coverage terminates by reason of a qualifying event, of at least 60 days' duration, and ending not earlier than 60 days after the later of that date or the date of the required notice — and the provision deeming an election to include other qualified beneficiaries while entitling each to a separate selection among types of coverage.
Frequently asked questions
How long is the election period?
It must begin no later than the date coverage would be lost on account of the qualifying event and must not end before 60 days after the later of that date or the date notice of the right to elect is provided. The statute states the same structure: at least 60 days' duration, ending not earlier than 60 days after the later of those two dates.
When is the first payment due?
A plan cannot require payment for any period of continuation coverage earlier than 45 days after the date the election is made. Payments for later periods are timely if made by the date that is 30 days after the first day of the period, or by a later date the plan or an insurer arrangement allows. Payment is considered made on the date it is sent to the plan.
What happens to claims incurred before the election is made?
The regulation allows a plan either to provide coverage during the election period or to terminate coverage and reinstate it once the election and any required payment are made, and it states that claims incurred during the election period do not have to be paid before that happens. If a provider calls to confirm coverage, the plan must give a complete response describing the beneficiary's rights, including any retroactive termination or reinstatement.
Can one family member elect for everyone, or decline for everyone?
Each qualified beneficiary must be offered an independent election. An unspecified election by a covered employee or spouse is deemed to include the other qualified beneficiaries from that qualifying event, but the regulation's example makes clear that an employee cannot decline on a spouse's behalf — the spouse must still be allowed to elect.
How much can the plan charge?
Up to 102 percent of the applicable premium for the period, or up to 150 percent for a period covering a disabled qualified beneficiary that would not have to be made available absent the disability extension. The applicable premium must be computed and fixed before the plan's chosen 12-month determination period begins, and mid-period increases are limited to three stated situations.
What if a payment is slightly short?
If timely payment is made in an amount not significantly less than required, it is deemed to satisfy the requirement unless the plan notifies the beneficiary of the deficiency and grants a reasonable period to pay it, with 30 days after the notice treated as a safe harbor. A shortfall is not significant only if it is no greater than the lesser of $50, or another amount the Commissioner may publish, or 10 percent of the amount required.