Kids and Health Care: Paying for Cobra

If you choose COBRA coverage, you have to pay the first premium within 45 days. And that first premium is likely to be high because it covers the period retroactive to the date your standard job-related coverage ended. Monthly payments are due according to health plan requirements, but COBRA rules allow for a 30-day grace period after each due date for payment.

COBRA also includes a controversial "short payment" rule. If your COBRA payment is short by an "insignificant amount" -- either 10 percent or $50, whichever is the less -- your former employer must accept the short payment as payment in full, or notify you of the deficiency and allow you another 30 days from the date that you receive the notification to correct the deficiency.

Regardless of how it pays its premiums, the plan must also allow you to pay premiums on a monthly basis if you want.

Your COBRA premiums can be increased if the costs of the health plan increase for everyone at the workplace -- but, generally, they will be set in advance of each 12-month coverage cycle.

Neither the health plan nor your former employer are required to send you monthly premium notices, so make sure you pay attention to due dates.

If the health plan offers former employees the option of converting from a group plan to an individual policy under COBRA coverage, you must be given that option and allowed to switch within 180 days of your COBRA coverage's end. But you'll pay individual -- not group -- rates, which are almost always more expensive. The advantage of doing this: You will usually be able to keep the individual coverage beyond the COBRA time limits.