Understanding COBRA Payments

Qualified beneficiaries are generally required to pay for COBRA coverage. The initial premium payment is typically required within 45 days after the date of the COBRA election by the qualified beneficiary. The premium costs are generally fixed in advance of each annual premium cycle, but might increase from year to year as costs to the plan increase.

You enter all payments received from COBRA beneficiaries for elected coverage. When the amount of the payment check equals the amount of the payment due, you enter the payment in the COBRA Received Payments program (P08994). The payment record updates the Number of Payments Made and Number of Payments Remaining fields in the COBRA Coverage table (F08920).

When the amount of the payment check is greater than the amount of the payment due, you enter the payment and then void the check. You can contact the participant, return the check, and request a new check for the correct amount. When you receive the new check for the correct amount, you enter the payment as you would any regular payment.

When the amount of the payment check is less than the amount of the payment due, you still enter the payment, but the system does not know how to apply the payment to the premiums due and cannot update the COBRA Coverage table (F08920). When this happens, you must contact the participant and determine how to apply the payment. After you enter the payment in the COBRA Received Payments program (P08994), you manually update the number of payments in the Coverage Review program (P08922). This entry then updates the COBRA Coverage table (F08920).