COBRA places the responsibility of making payments for the benefits availed on the employee. Individuals wanting extended coverage may be required to pay the entire premium for coverage plus two percent of the cost to the plan, making the total payment 102 percent of the premium normal members pays. For COBRA insurance for small business, or mini-COBRA, the two percent additional coverage becomes five percent,making the total payment 105 percent of the premium normal members pay. The recent federal subsidy, as part of American Recovery and Reinvestment Act of 2009 subsidizes 65 percent of premium cost for both COBRA and mini-COBRA.
Employees also have the obligation to notify the plan administrator of their intention to opt for continued coverage within 60 days of receiving notification from the employer.
Other responsibilities include the covered employees or their dependents informing the plan administrator of:
- Divorce, legal separation, disability or a child losing dependent status under the plan.
- Change of marital status.
- Change of address.
Employees or their dependents opting for the coverage have to inform the designated plan administrator within the stipulated time period and start paying the applicable premium, and all costs related to deductibles. Failure to make timely payments may result in loss of coverage. The premiums are usually set in advance, in 12-month cycles. The plan administrator is not obliged to send invoices or reminders about payments, and employees have to contact the designated plan administrator to make timely payment of premiums.
COBRA allows adding new dependents when the plan is in force, for any reason including change of status or loss of such dependents coverage elsewhere. For instance, an employee under COBRA may incorporate a newly wed spouse or newborn for the balance of the period of the COBRA election by submitting a revised dependent list to the plan administrator within 30 days of the event, such as marriage or birth having taken place. COBRA premiums on a composite basis means the premium amount remains unchanged regardless of the number of dependents incorporated.