COBRA Health Insurance Explained


COBRA insurance enables qualified, recently separated employees to continue their group coverage by assuming responsibility for the total premium (plus a 2% administrative fee) for their coverage. COBRA is generally available for qualified individuals leaving a company with 20 or more employees. But some states have created COBRA-like programs for groups of less than 20 full time employees.


COBRA Insurance Extends Group Coverage Temporarily


  • Allows for an extension of group benefits for a period of up to 18 months in most cases. In some instances COBRA can be extended for up to 36 months.
  • You get the same coverage as your former employer offers existing employees (assuming your former employer is still in business).
  • You pay the full cost of the coverage, plus a 2% administrative fee.
  • Full premium means any amount you contributed, PLUS what your employer contributed, PLUS the 2% fee.
  • Exhausting COBRA coverage is required for HIPAA eligibility.

Cost: Employer Sponsored vs. COBRA

 While Employed   Enrolled In COBRA
 Family of four, age 30-39  Family of four, age 30-39
 PPO, $250 deductible  PPO, $250 deductible
 Monthly premium: $756.00    Monthly premium: $756.00          
 Employer pays 90%: $680.40         You pay 102%: $771.12
 You pay 10%: $75.60  

The good and the bad


COBRA insurance is good because it provides assurance that individuals will not be without health insurance coverage and gives individuals time to find other coverage.  The bad part about COBRA is that it can be too costly for people to pay for.  Insurance companies noticed this problem and developed health insurance plans specifically to offset these high cost.  Temporary health insurance plans are affordable and simple to apply.   If you are an individual that has no preexisting conditions you should pursue this alternative coverage.


Things to consider when deciding if the COBRA coverage you have been offered are your best option:


  • Whether or not you prefer the comprehensive benefits and don’t mind the added cost
  • Whether you are willing to exchange continual, guaranteed coverage for an added cost.
  • If you have had recent health problems.
  • If you have had ongoing health problems.
  • If you require expensive medications.
  • Whether or not you have been declined for private insurance recently.
  • If you are currently pregnant.
  • If you found a new job and your new employer does not offer a health plan.