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When Payments Are Late or Short

If your group health plan is like most others, premium payments for coverage are due each month.  But what happens when a COBRA enrollee misses a payment, or pays less than the full amount due?

30-Day Grace Period If Payment is Late

Under COBRA, your plan can set premium due dates for periods of coverage.  However, the plan must give COBRA enrollees a 30-day grace period to pay the premium.  According to the Department of Labor, payment is considered to be made on the date it is sent to the plan. Employers that do not receive a premium by the first day of the period of coverage have the option to cancel COBRA coverage until payment is received.  However, if the premium is paid within the grace period for that period of coverage, the plan must then reinstate the coverage retroactively back to the beginning of the period of coverage.  Accordingly, it may be easier- both administratively and for your former employee- to wait until the 30-day grace period has run to cancel COBRA coverage.  

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