How Much Does COBRA Cost Per Month?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law allowing individuals to temporarily continue their health coverage after qualifying events like job loss or reduced work hours. This provides a bridge during transitions, preventing gaps in health insurance. Unlike active employment where employers contribute to premiums, individuals typically bear the full cost of COBRA themselves. Its expense often becomes a significant consideration for those utilizing it.

Components of COBRA Cost

The cost of COBRA continuation coverage includes the full health plan premium and a small administrative fee. Federal law permits plans to charge up to 102% of the total cost of coverage. This premium typically includes both the portion an employee previously paid and the amount their former employer contributed toward the health plan.

The 100% portion covers the actual cost of the health coverage itself, encompassing all benefits provided by the original employer-sponsored plan, such as medical, dental, or vision. The additional 2% is an administrative fee designed to cover the employer’s costs associated with managing COBRA; however, employers are not always required to charge this fee. Under COBRA, the responsibility for the entire premium shifts from being shared between the employer and employee to being solely the individual’s.

Factors Influencing Your COBRA Premium

The specific amount an individual pays for COBRA varies significantly. Several factors influence the underlying premium, making it important to understand these variables when estimating your costs.

Type of Health Plan: More comprehensive plans, like PPOs or those with extensive benefits, typically have higher premiums than restrictive plans such as HMOs or high-deductible options. If dental or vision coverage was part of your original employer plan and is continued, those costs are also included.
Number of Individuals Covered: Adding a spouse, children, or other eligible dependents increases the monthly cost, as the premium is calculated based on the total number of people enrolled.
Employer’s Group Rate: This is the negotiated cost for the health plan with the insurer. This rate can differ widely between companies based on their size, employee demographics, and claims experience, directly influencing the base cost of coverage.
Geographic Location: Healthcare costs and insurance rates vary across different regions of the United States, which can influence premiums.

Estimating Your Monthly COBRA Premium

Determining the precise monthly cost of COBRA requires specific information, as a universal number cannot be provided due to the many variables involved. The most reliable source for this information is the COBRA election notice, which your former employer is legally required to send. This notice will explicitly state the exact monthly premium amount for each available plan option you are eligible to elect.

Before receiving the official notice, you can estimate your potential COBRA premium. Review past pay stubs or annual benefits statements, which often detail the total premium cost of your employer-sponsored plan before any employer subsidy. By adding the amount you paid to the amount your employer contributed, and then multiplying that total by 1.02 (to account for the potential 2% administrative fee), you can get a rough idea of your full monthly cost. This estimation serves as an approximation until the official COBRA election notice is received.

If the election notice has not arrived or if you have questions regarding the stated costs, contacting your former employer’s human resources or benefits department is a practical step. They can provide clarification and help you understand the specific charges. The amount listed on the COBRA election notice will already include the full premium plus the administrative fee, so you will not need to perform additional calculations for the final cost.