COBRA permits the employer to charge an administration fee of __%.

Prepare for the Consolidated Omnibus Budget Reconciliation Act (COBRA) Test. Utilize flashcards and multiple choice questions, each with hints and explanations. Ace your test with confidence!

Multiple Choice

COBRA permits the employer to charge an administration fee of __%.

Explanation:
The key idea is that COBRA allows a small administrative fee to be added to the continuation coverage premium, but that fee has a fixed cap. The permitted admin fee is 2% of the premium. So the amount a COBRA participant pays can be the regular group rate plus a 2% admin fee, effectively up to 102% of the active employee premium. This is why 2% is the correct choice. The other percentages (1%, 3%, 5%) aren’t the standard cap under COBRA.

The key idea is that COBRA allows a small administrative fee to be added to the continuation coverage premium, but that fee has a fixed cap. The permitted admin fee is 2% of the premium. So the amount a COBRA participant pays can be the regular group rate plus a 2% admin fee, effectively up to 102% of the active employee premium. This is why 2% is the correct choice. The other percentages (1%, 3%, 5%) aren’t the standard cap under COBRA.

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