jfsga
May 1 2001, 05:06 PM
Is a plan required to give COBRA participants a 30 day notice of a rate increase? A self-funded plan did not complete rate negotiations until the anniversary date. Can the employer require the higher premium for COBRA participants at the anniversary date or is there a requirement for a 30 day notice.
Mary C
May 2 2001, 08:14 AM
I know of no regulations requiring a 30 day notice of a rate increase, only that 1 increase a year is allowed. I would be interested if anyone knows of anything different, too.
snapper
May 5 2001, 08:20 AM
Listed below is a posting I copied from a previous posting. My reading of this posting is that if you have recently signed up for COBRA, the rate increase cannot be passed on for a year. If this is not true, could someone correct me.
Thanks
Plans may charge up to 102% of the "applicable premium" for COBRA coverage. Code § 4980B(f)(2)©. The applicable premium is the cost to the plan of providing coverage and, for insured plans like yours, the cost to the plan is the premium charged by the insurance company to the employer (less any experience refunds or dividends). See, e.g., Draper v. Baker Hughes Inc., 892 F. Supp. 1287 (E.D. Cal. 1995). The applicable premium must be fixed for a 12-month "determination period." ERISA § 604(3); Treas. Reg. § 54.4980B-8, Q/A-2(a). Therefore, a mid-period increase in insurance rates will not permit a mid-period increase in the COBRA premium charged to QBs. However, if you set the determination period for each of your plans to match the insurance company's contract period, you will be okay. The determination period does not have to match the plan year. It can be any period of 12 consecutive months so long as it is applied consistently from year to
year. Treas. Reg. § 54.4980B-8, Q/A-2(a).
Sandra Pearce
May 5 2001, 12:03 PM
To snapper - Qualified Beneficiaries elect COBRA during the twelve-month period of established rates. Therefore a rate established on 5/1/2000 may be changed on 5/1/2001. A Qualified beneficiary who began COBRA coverage on 2/1/2001 would be subject to the same adjustment in rates as all other qualified beneficiaries on 5/1/2001.