How Much Does COBRA Insurance Cost?

The time left on your employer-provided health insurance is dwindling, and you don't have a replacement yet. What do you do? COBRA insurance is an option until you can get coverage from a new employer.

COBRA insurance gives you the option to continue your employer-sponsored health insurance if you lose that coverage for a variety of reasons. Some valid reasons include quitting, getting laid off or having your hours cut, making you no longer eligible for medical coverage. Dependents might also qualify for coverage separate from the employee in cases such as the covered employee's death, a divorce from the covered employee or a dependent child no longer qualifying as a dependent under the plan. Companies with at least 20 full-time equivalent employees usually have to offer COBRA insurance options.

If you qualify for COBRA insurance, you're entitled to receive the same coverage as current employees. Any dependents previously covered on your work-sponsored plan also qualify for COBRA coverage. The coverage is usually available to you for 18 to 36 months.

What Is the Price Based On?

The amount you'll pay for COBRA insurance is based on how much the plan costs your former company. You'll typically pay the full monthly premium for the plan without contributions from your employer. Your COBRA insurance cost is capped at 102% of the total cost for current employees (including the portion paid by the employer and the portion paid by employees). This allows for a 2% fee for administrative charges.

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How Much Does It Cost?

COBRA insurance costs vary by person, depending on the cost of your employer's plan. The total premiums for your coverage shouldn't change once you go on COBRA. What will change is how much of it you pay. Your company will likely no longer pay its share of your premium each month as it does for covered employees, which leaves you to cover the entire premium cost every month.

To determine how much you'll pay for COBRA, you'll need to know the total premium cost for the plan you're on. The amount you've been paying each month is only your portion — your employer has likely been paying the rest of the premium. If you know how much your company contributes each month, simply add that amount to your portion and add another 2% to account for possible administrative fees. Your HR department should also be able to tell you the exact COBRA insurance cost you'll have.

Are There Cheaper Options?

COBRA insurance rates are often high, but they might still be cheaper than buying coverage through the marketplace. The coverage may also be better than you'll find with marketplace plans, which can save you in overall healthcare costs. However, there are some other options.

Short-Term Health Insurance

If you expect to start a new job with insurance soon, you can get a short-term health insurance plan, which you can usually have for up to a year. But consider that the lower price usually comes with less robust coverage and the possibility of having pre-existing conditions denied.

Get on Your Spouse’s Plan

If your spouse's company offers health insurance, you might be able to enroll in it even if it's not during the normal enrollment period. Losing your existing coverage should be a qualifying life event that allows you to start coverage under your partner's plan.

Healthcare Sharing Ministry Plans

Another alternative is a healthcare sharing ministry plan. However, these programs aren't actually insurance and aren't regulated. You pay into the pool and request reimbursement if you have healthcare expenses. There are no guarantees you'll receive reimbursement for all claims, though. Read all the terms of the plan if you consider this option.