COBRA Insurance Calculator

What COBRA Covers and Costs

COBRA is a United States federal arrangement, so this page prices a specific national programme rather than a general one. The arithmetic underneath is portable to any continuation-coverage scheme that charges the whole premium plus an administration percentage, but the durations, thresholds and terminology below are the American ones.

Continuation coverage lets someone keep an employer health plan after leaving a job, having hours reduced, or another qualifying event. The cost jump is the point: instead of paying only the share deducted from pay, the former employee pays the entire premium, both the employer’s former share and their own, plus an administration charge. Federal guidance sets the ceiling explicitly: premiums cannot exceed 102% of the cost to the plan, and that cost to the plan is defined as both the portion employees paid and any portion the employer paid before the qualifying event. That is where the calculator’s 2% default comes from.

One eligibility limit sits behind all of this. The federal law applies only to group health plans run by employers with 20 or more employees in the prior year, and it does not cover plans sponsored by certain church-related organisations or by some government bodies. Smaller employers fall outside it, which is why several states operate their own continuation schemes.

Typical COBRA Costs

Employers commonly cover the larger share of a premium while someone is employed, so the increase on leaving is steep. On a full premium in the region of 500 to 800 a month for individual cover, the 102% ceiling puts continuation at roughly 510 to 816 a month, and across the standard 18-month period that is about 9,180 to 14,688. Family cover in the region of 1,400 to 2,000 a month works out at roughly 1,428 to 2,040 monthly and 25,704 to 36,720 across 18 months.

Longer periods apply in defined circumstances rather than by choice, and they scale the total directly: at the loaded 510 a month, 29 months comes to 14,790 and 36 months to 18,360. Marketplace coverage bought individually is a separate route, and for someone whose income has just dropped it is frequently cheaper once income-based savings are applied.

Worked Example for Typical Situation

Employer premium 400 a month, employee portion 100 a month, administration 2%, 18 months.

The combined premium is 500, the administration charge is 10, and continuation costs 510 a month, or 9,180 across 18 months. The step up is the figure that surprises people: someone previously paying 100 a month from their pay now pays 510, an increase of 410 a month, or 5.1 times what they were paying. The calculator reports that increase as its own row for exactly that reason.

That total is a budgeting figure rather than an unavoidable one. Pricing it against the alternatives during the election window is what the figure is for, since the arithmetic here deliberately covers only one of the available routes.

What the Calculator Does Not Model

Marketplace premiums and any income-based savings a household qualifies for. Eligibility for the public programme that covers lower-income households. Severance arrangements that sometimes include a period of employer-funded coverage. State continuation schemes, which differ from the federal rules and cover employers below the 20-employee threshold. Differences in plan quality, network and drug coverage between the continued plan and any replacement. Premium changes that take effect during the coverage period rather than at the start.

COBRA Alternatives

Marketplace coverage, where income-based savings often make it the cheaper route after a drop in income, with coverage starting at the beginning of the following month. A spouse or partner’s employer plan, where losing coverage typically opens a special enrolment window. The public programme for lower-income households, where income qualifies. Short-term policies, which cost less but cover less and are not available everywhere. State continuation schemes for employees of smaller employers.

The election window runs 60 days from the qualifying event, and electing later is retroactive to the date coverage was lost, with premiums owed from that date. That is a genuine option to compare during those 60 days, but it also means an election made late arrives with the accumulated premiums due at once.