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Question: We know that COBRA rates can only be increased at the beginning of a 12-month rate determination period. How is the 12-month period determined?

Answer: A determination period is any 12-month period selected by the plan as long as it is applied consistently, year to year. Most employers choose the plan year as their 12-month period, for ease of administration.

There are three exception cases under which an employer may change the rates during their normal determination period. Those exceptions are:

  • If the plan previously charged less than 102 percent of the premium and the new amount does not exceed 102 percent of the premium;
  • If the increase happens during a COBRA participant’s disability extension period and the increase amount doesn’t exceed 102 percent of the premium; or
  • If a COBRA participant changes their coverage, under specific circumstances.