COBRA Open Enrollment Rules

by Rebecca Mazin; Updated September 26, 2017

Former employees covered by company benefits under COBRA are gone but should not be forgotten. When it comes time for annual open enrollment, these COBRA participants have the right to make changes in their benefits selections.

Communicate On Time

As soon as the schedule is set for open enrollment, including communications and deadlines, COBRA participant materials also need to be identified. This group of former employees, and their dependents, do not need invites to in-house meetings but they should be informed of any changes, particularly if they are in a benefits carrier. The best way to do this is to send a letter home. If COBRA is administered by a third-party provider, they may take care of this. Check before Jan. 15 of a new year rolls around and an angry former employee has not received updates.

Premium Cost Increases

Benefit costs are pretty much guaranteed to go up every year. COBRA participants absorb the increase. Make sure that they know this well in advance to avoid shock from big increases and the need to collect extra premium dollars that may never be recovered. It is a good idea to send out a new invoice with the correct rates and dates, even if COBRA-covered individuals are not typically sent an invoice.

Set Deadlines

Just as deadlines are set for employee enrollment, COBRA participants should be given the same deadlines for turning in information. The information for these people should clearly indicate that, if no changes are made, the benefit selections will stay the same and the former employee can be charged an increased premium due to rate adjustments.

Switching Plans

COBRA participants must have the same rights at open enrollment as similarly situated active employees. So if there is a new plan to choose from, COBRA enrollees can elect to be covered under the new plan. They can also add a spouse, or eligible child, at open enrollment. The forms can be different since the costs, the entire premium plus an administrative fee of up to 2 percent, will also be different than those for active employees.

COBRA and a New Baby

If an individual on COBRA, or covered spouse, has a new baby, the child begins coverage just as if the plan was provided for an active employee. They have the same grace period, usually 31 days, to enroll. If the new baby increases the cost of coverage, this can increase the cost of COBRA to the participant. The new cost should be made clear at the time of enrollment, a bill or statement is really helpful. If the baby is born on the 10th of the month, but the full premium is charged for the entire month, this can be passed on to the COBRA participant.

About the Author

With over 20 years of expertise, Rebecca Mazin co-founded Recruit Right to create usable solutions for employers to meet complicated HR challenges. Before Recruit Right, Mazin held key positions at Hyatt Hotels, Owens Corning and the NLRB. Mazin coauthored The HR Answer Book, AMACOM, 2004 and is currently writing The Employee Benefits Answer Book to be published by Pfeiffer.