Calculate COBRA Costs

Understand how to calculate monthly COBRA insurance costs


Considering COBRA insurance? For most people who recently lost or quit their job, finances and money become a number one priority due to the loss of income, and many people quickly realize that COBRA insurance can be very expensive. Normally much more expensive than they thought or had initially planned for.

Due to this, one of the most important steps to take when considering COBRA health insurance for you and your family is to calculate the exact cost of COBRA insurance. This will allow you to understand if you can afford COBRA insurance coverage and also help you understand if there is a better priced health insurance option out there.

As part of any decision to enroll in COBRA insurance, it is extremely important to both calculate the cost of your monthly COBRA insurance premium, as well as get free quotes for alternative health insurance plans. This will allow you to compare all of your options and make a decision that works for your finances and health care needs.

Calculating Your COBRA Insurance Monthly Cost

Step 1: Calculate your Monthly Health Insurance Premium

In order to understand what COBRA insurance will cost you every month, you first need to understand both what you and your employer paid for your health insurance. This information is normally located on your pay stub (as health insurance or insurance deductions) and should also be included on the COBRA insurance election form. Under the COBRA insurance law, you will be responsible for paying both your contribution and your previous employer’s contribution or subsidy. For most people, their employers likely paid anywhere from 50-90% of the cost, meaning signing up for COBRA insurance will significantly increase monthly medical insurance costs.

Let’s look at an example: if your employer paid $300 monthly and you paid $100 monthly, that means that your monthly COBRA insurance cost would be $400 before the administration fee which we will discuss in the next step.

Step 2: Add the Monthly Administration Fee

In addition to having to pay your full monthly health insurance premium with COBRA insurance, you also have to pay a 2% administration fee. To calculate the cost of the COBRA insurance administration fee, simply mutiple your monthly premium by 1.02 or 102%. For our last example, this would increase the monthly payment to $408 monthly.

Step 3: Compare Monthly COBRA Insurance Premium Against Alternatives

The final step that anyone should take when calculating COBRA insurance costs is to compare their monthly COBRA costs to COBRA alternatives. The easiest way to do this is to request free quotes from online insurance providers for plans that are similar to your current plan, as well as short term or catastrophic health insurance plans. Compare what each plan offers, as well as the cost of each plan, and use that information to make a smart financial and medical decision for you and your family.