I've never done this, but according to my Vogue Knitting, you would take your elastic, and working on the WRONG side, you thread the elastic horizontally through the back of each knit stitch in your ribbing. You would attach your elastic thread to the side seam on each row if you knit it flat. It doesn't say for doing it in the round, but I would think you could pick a starting point for your elastic and attach it there when you get back to it.
As you add the elastic, pull on it slightly to draw it in. I hope that works!