How Much Does COBRA Insurance Cost Per Month?
Discover how COBRA insurance costs are determined monthly. Learn the factors influencing your premium and how to find your exact individual rate.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows individuals to temporarily continue their health coverage after certain qualifying events. These events can include job loss, reduction in work hours, or other life changes that would typically lead to a loss of employer-sponsored benefits. COBRA provides a valuable bridge for health insurance, but its monthly cost is often significantly higher than premiums paid as an active employee.
Understanding the Full Monthly COBRA Premium
COBRA is expensive because of its cost structure. When an individual is an active employee, their employer typically subsidizes a substantial portion of the health insurance premium. Employers often cover about 80% of the total cost, such as 83% for single plans and 67-75% for family plans.
Under COBRA, the responsibility for the entire premium shifts to the individual. This means the COBRA participant must pay the full cost. In addition to the total health plan premium, the law permits an administrative fee, legally capped at 2% of the total cost. Therefore, the monthly COBRA premium is effectively 102% of the full cost of the group health plan coverage.
Key Factors Influencing Your COBRA Cost
The monthly COBRA premium varies based on several factors. The type of health plan an individual was enrolled in directly impacts the cost. For example, a Preferred Provider Organization (PPO) plan might have a different premium than a Health Maintenance Organization (HMO) or a High Deductible Health Plan (HDHP).
The benefits an individual elected also play a role in determining the monthly premium. This includes whether the coverage was for medical only, or if it also encompassed dental, vision, or other ancillary benefits. The distinction between individual and family coverage also alters the cost, with family plans costing more. The former employer’s group health plan’s cost structure, reflecting its size, demographics, and network, dictates the base premium.
Determining Your Individual COBRA Premium
The COBRA Election Notice is the most accurate source for specific monthly costs. This formal document is provided by the former employer or their designated COBRA administrator. It details the cost and terms of continuation coverage.
The COBRA Election Notice details the exact monthly premium for each available coverage option, such as individual, family, or different plan types. It also outlines information on payment due dates and accepted payment methods. This notice helps individuals understand their financial obligation and make timely payments to maintain coverage.