How Much Does COBRA Cost?
I’m interested in keeping my work health plan after I resign next month. How much does COBRA insurance cost?
The average monthly cost of COBRA Insurance premiums ranges from $400 to $700 per individual.
No Pre-Existing Conditions?
If you do not have pre-existing conditions, visit the health enrollment center to learn about private marketplace plans that are more affordable than COBRA continuation.
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The Actual Cost of COBRA Insurance
Many assume that what their employer deducted from their paycheck is what they’ll pay per month in COBRA insurance. However, the actual cost of COBRA insurance is often misunderstood. When an employee is working, the employer typically pays a portion of the health insurance premium, and the employee pays the remaining amount through their contribution. When COBRA insurance starts, the individual must pay the full amount of the insurance premium, including both the part previously covered by the employer and their own prior contribution. An administration fee is added on top of this. As a result, COBRA insurance initially appears more expensive, but in reality, the actual cost of coverage hasn’t changed.
It’s simply that the responsibility for paying the entire premium has shifted from being shared between the employer and employee to being solely the responsibility of the individual.
Therefore, the actual cost of COBRA insurance is the total amount that was previously paid by the company and the employee, without any subsidy from the employer.
COBRA insurance costs include:
- The entire monthly premium of the employer plan that you are continuing
- An additional 2% in administration fees
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COBRA Eligibility
Calculate Your COBRA Cost
To estimate your monthly COBRA costs, start by identifying the amount that was deducted from your paycheck for health insurance. Next, add this to the amount that your employer contributed. Together, these figures will give you an estimate of the total monthly cost for continuing your coverage under COBRA.
For a more precise calculation, you can also use the COBRA Premium Calculator.
Use Last Year’s W-2 to Determine COBRA Costs
In the W-2 form of the person who paid for the health insurance, Box 12, Code DD shows the total annual cost of employer-sponsored coverage. Divide this by 12 to gauge the monthly COBRA premium.
Remember, this method assumes the cost structure remained the same and the employer-sponsored health insurance cost didn’t change. For an exact quote, consult the COBRA plan administrator or your enrollment documents.
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COBRA Administration Fee
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employers are allowed to charge an administrative fee up to 2% in addition to the full cost of the health insurance premium. This fee is designed to cover the administrative expenses associated with managing the continuation of healthcare coverage for former employees or eligible dependents. Authorized by federal law, the 2% administrative fee is typically included in the monthly COBRA premium amount. This standardized fee offsets the costs of maintaining the COBRA program and applies to all qualifying plans.
Your Administrator
A COBRA administrator is responsible for managing the continuation of healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), handling tasks like sending notices, managing enrollment, and collecting premiums. Their primary function is to ensure compliance with federal guidelines for both employers and eligible former employees or dependents.
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What is COBRA Continuation?
COBRA Insurance is actually the name of a federal law and not a company. All employers with 20 or more full-time workers are required to offer COBRA, which is the same work health insurance you’ve had.
Continuing on an employer’s major medical health plan with your COBRA rights is expensive. You are now responsible for the entire insurance premium, whereas the employer had subsidized a portion of that as a work benefit.
Often times there is a 2% administration fee that may be legally added on.
As COBRA is the same work health insurance you had, the plan continues to be managed by the employer.
What Are the Benefits?
Because this health insurance is a continuation of the coverage you had through an employer, the COBRA benefits will be the same as you had before.
Licensed Insurance Agents
Do you have more COBRA questions? Try contacting a healthcare.gov-certified insurance specialist. These COBRA customer service agents are licensed in all 50 states. They can offer advice and cost alternative plans that best suit your needs.
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Average Cost of COBRA Insurance In 2024
Health insurance plans through an employer are ACA Certified. They cover pre-existing conditions and have prescription medication benefits. COBRA is a continuation of your most recent employer group health plan.
According to Value Penguin, the average cost of individual health insurance in the United States is $584/month in 2024. Not all states are close to equal. In Alaska, the monthly average premium is $948, for example. Whereas in Arkansas, individuals may pay over $460 per month for health care coverage.
Why Pay for COBRA?
Whether you’re in between jobs or recovering from a recent layoff, COBRA insurance serves as a lifeline for accessing the care you need, from prescription medications to coverage for pre-existing conditions. Compared to other gap and short-term insurance plans, paying for COBRA:
- Lets you extend the same group health coverage offered by your most recent employer.
- Ensures you receive the same group rate and have access to the same network of providers as you did under your recent employer’s plan.
- Means you don’t have to start over in terms of deductibles and in-network providers.
- Can be done with your health savings account (HSA).
Average Monthly COBRA Premium Cost By State
Last updated: March 7, 2024
| State | 2024 Cost |
|---|---|
| National | $584 |
| Alabama | $584 |
| Alaska | $948 |
| Arizona | $517 |
| Arkansas | $461 |
| California | $600 |
| Colorado | $535 |
| Connecticut | $665 |
| Delaware | $567 |
| Florida | $613 |
| Georgia | $509 |
| Hawaii | $490 |
| Idaho | $473 |
| Illinois | $633 |
| Indiana | $436 |
| Iowa | $548 |
| Kansas | $602 |
| Kentucky | $497 |
| Louisiana | $666 |
| Maine | $582 |
| Maryland | $384 |
| Massachusetts | $639 |
| Michigan | $497 |
| Minnesota | $423 |
| Mississippi | $511 |
| Missouri | $594 |
| Montana | $568 |
| Nebraska | $691 |
| Nevada | $566 |
| New Hampshire | $373 |
| New Jersey | $550 |
| New Mexico | $577 |
| New York | $873 |
| North Carolina | $638 |
| North Dakota | $548 |
| Ohio | $535 |
| Oklahoma | $596 |
| Oregon | $578 |
| Pennsylvania | $576 |
| Rhode Island | $455 |
| South Carolina | $541 |
| South Dakota | $715 |
| Tennessee | $558 |
| Texas | $584 |
| Utah | $599 |
| Vermont | $908 |
| Virginia | $409 |
| Washington | $503 |
| West Virginia | $877 |
| Wisconsin | $583 |
| Wyoming | $838 |
COBRA Rules In Your State
For detailed information on mini-COBRA laws, which can vary significantly by state, ensuring you have the most accurate and up-to-date guidance is essential. These state-specific regulations are crucial for understanding your rights and options regarding continued health insurance coverage.
Learn more about the mini-COBRA laws in your state and how they may affect you.
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