When can an employer charge additional fees for COBRA premiums?

The appropriate context regarding when an employer can charge additional fees for COBRA premiums is defined by the regulations surrounding the Consolidated Omnibus Budget Reconciliation Act (COBRA). Under COBRA, employers are permitted to charge qualified beneficiaries (such as employees and their covered dependents) up to 102% of the total premium cost. This total includes the full premium amount that the employer pays, plus a small additional administrative charge that can be up to 2% of the premium.

This means that the maximum additional charge an employer can impose is 20% above the total premium cost, which corresponds to the allowed administrative fee. This provision ensures that while employers can recoup some costs associated with administering the COBRA coverage, they are still limited in how much they can charge, thus providing a safeguard for those electing to continue their health coverage.

The other options do not align with the stipulations of COBRA. Charging for any administrative costs without limit or charging only if the employee consents does not accurately represent the allowable practices under COBRA. Moreover, being in financial trouble does not grant an employer the discretion to unilaterally increase fees beyond what is prescribed by law. This regulatory framework emphasizes the balance between an employer's ability to cover costs