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Price of COBRA Insurance

Determine the Price of Monthly COBRA Coverage

Price of COBRA Insurance

It is extremely important for anyone to knowing the price of COBRA coverage before making the decision to enroll because for most, especially those out of work, COBRA's price is very expensive. In 2011, the average family paid over $1100 monthly to use COBRA benefits and an individual spent well over $400. Here is a step-by-step guide to help you determine the price of COBRA.

Step 1: Determine Your Former Monthly Premium Contribution

The first step to knowing how much COBRA will cost is to figure out how much you were paying for health insurance. This information can usually be found on your pay stub under pre-tax deductions or you can ask your former employer. Write that number down.

Step 2: Determine Your Former Employers Contribution

Next you will need to figure out how much your employer paid for your health plan. This number will also be on your paystub, usually under Employer benefits or simply benefits. Since employers normally pay 50% or more of healthcare costs, this amount is usually quite substantial. You can also ask your former employer for this amount if you cannot find it. Write this number down.

Step 3: Calculate Your Full Premium

Now to calculate the full premium cost, which you are responsible for paying under COBRA, you must add together how much you paid monthly for insurance (from #1) with what your employer paid monthly (from #2). This is your full premium.

Step 4: Calculate the Monthly COBRA Administration Fee

In addition to the full premium, to enroll in COBRA and continue your coverage you also must pay a 2% administration fee. To determine how much that will be, take the full premium amount and multiply it by .02 or 2%.

Step 5: Find the Price of COBRA Monthly

At this point you are ready to find out the full price of COBRA insurance monthly. Simply add together the full premium you calculated in step #3 and the administration fee in #4. This number is the amount you must pay for COBRA coverage, also known as your COBRA premium.

Step 6: Compare the COBRA Price to Alternatives

Are you shocked by the price? Most people are but luckily there are ways to save money. Many private insurance companies have realized that people can't afford COBRA and therefore have created comprehensive plans that are affordable. These plans are similar to the coverage you would get with COBRA, but since they are individualized they are less expensive. (Learn more about Why COBRA is so Expensive) You can explore these plans and what's available in your area by getting a quote below, which will provide multiple options for health insurance.

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