COS period and actual period when applying

Hi
I am about to extend my tier 2 visa and my sponsor is now applying the COS for me.
I like to know whether I must fill up the same duration as per the COS period or I can put down the duration I need during the application process.
For example, my sponsor has obtained 5 year COS for me but I only required 3 years. Can I just choose 3 years when I apply for extension?
For the scenario above, how many years I need to pay for the Health surcharge?
Is it now all tier 2 standard application must be applied online (including the dependents applications as well)?

How do the HO extend the period of extension? For example mine is expired in 24 Feb 2016. If I submit my application say 24 Dec 2015. is my visa extended from 24 Dec 2015 or from the expiry date 24 Feb 2016?

Thanks
Ed