Calculating COBRA Excess Premium Amounts

The following list describes how the application calculates the administrative fee or excess premium amount for COBRA contributions:

1. Determine the excess premium percent. If the Premium Percent field on COBRA Parameters (BN00.2) is 100 percent or greater, the application subtracts 100 from the value of the Premium Percent field.

   For example, if the Premium Percent field is 102.00, the excess premium percent is 2.00 (102.00 - 100).

   If the Premium Percent field on BN00.2 is 100 percent, the application does not calculate the excess premium.

2. Determine the cost for each percent. The application divides the annual COBRA participant contribution by the value of the Premium Percent field.

   For example, if the annual contribution is $280.00, the cost for each percent is $2.75 ($280/102.00).

3. Determine the excess premium amount. The application multiplies the cost for each percent by the excess premium percent.

   The excess premium amount of the example is $5.50 ($2.75 * 2).

   The application posts the administration fee to the excess premium account selected on COBRA Parameters (BN00.2).