South Carolina Life and Health Practice Exam

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), what is the maximum premium that can be charged to a terminated employee for their benefits?

1. 90%

2. 100%

3. 102%

4. 110%

The correct answer is: 102%

The correct answer is 102%. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), when an employee is terminated (for reasons other than gross misconduct), they and their dependents have the right to continue their group health benefits for a certain period. While they can continue coverage, they must pay the full premium for the health insurance plus a 2% administrative fee. This means that the maximum premium charged to a terminated employee can be up to 102% of the total premium cost for the health plan. This provision ensures that while the individual can maintain their health insurance coverage, they are responsible for the entire cost of the premium, which includes both the employer's and employee's share, along with the additional administrative charge. It’s important for individuals to understand this cost structure as they navigate their health insurance options post-termination.