Under COBRA, which statement about premiums is correct?

• A. Premiums are fixed for the entire COBRA period.
• B. Premiums may reflect plan changes that apply to all similarly situated enrollees and cannot exceed 102% of the cost.
• C. Premiums may be increased for individual enrollees at the plan's discretion.
• D. Premiums are set by the government.

Answer: (B)

Under COBRA, the amount a former employee or other qualified beneficiary pays for continuation coverage is tied to what the plan actually costs and to changes that affect all similarly situated enrollees, but it must stay within a 102% cap of that cost. This means the premium can go up or down if the plan’s cost changes for everyone in the same coverage tier, reflecting the true cost to provide the coverage, plus a small administrative component. The government doesn’t set these premiums; they’re determined by the plan sponsor, within the 102% limit.