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How Much Does COBRA Insurance Cost? Three Examples

Posted on: April 3rd, 2011 by Cobra Insurance Guide

How Much Does COBRA Insurance Cost?  Three ExamplesThe cost of COBRA insurance is based on your current health insurance premium, both your cost and the cost your company subsidizes or pays, plus a 2% administration fee under the COBRA insurance federal law.  For many people this will be substantially more than they are used to pay since most employers pay for anywhere between 40%-100% of health insurance costs depending on the company.  So what does it really cost, let’s look at three examples.

Example 1:  Single Man, PPO, COBRA Monthly Cost:  $501.27

Henry P. was a single man laid off from his job as a medical sales man.  Henry had a PPO health insurance plan for himself.  His monthly cost while working was 30% of the premium which was $115.60.  He found that amount by looking at his most recent payment stub.  His employer covered 70% of the cost of his health insurance plan, which was $385.67.  Therefore his total medical insurance cost was $501.27 per month.  Under COBRA he would be responsible for the entire amount plus a 2% administration cost, so under COBRA insurance his total monthly premium would be $511.29.

Example 2:  Family of 4, HMO, COBRA Monthly Cost, $1452.48

Luisa B. recently quit her job as a marketing executive and her HMO health insurance plan was covering her and her 3 children.  Under the plan at her former employer, she paid 50% of the health insurance premium which amounted to $712.  Her employer subsidized the other 50% of the cost, also $712, making her total health insurance cost $1424.  She will be responsible under COBRA to pay that amount plus the 2% COBRA insurance administration cost, which amounts to $1452.48 per month to continue to maintain her health insurance under COBRA for her family.  Luisa did not elect to sign up for COBRA until the end of the 60 day window, which means her first payment she will have to pay for both months retroactively, amounting to an initial payment of $2904.96, and then $1452.48 for the length of her COBRA health insurance coverage.

Example 3: Married Couple, Small Company, State Sponsored COBRA Cost: $669.05

Sarah M. worked at a small internet company with only 12 employees, meaning she was not eligible for federal COBRA insurance continuation.  However, Sarah M. was lucky enough to work in a state that offers a mini-COBRA plan that she can elect for her husband and herself.  Under the state’s COBRA plan, Sarah M. is responsible for the entire premium for her premium health plan plus a 11% administration fee.  Under her former plan, Sarah was responsible for 25% ($120.55) of the health insurance cost and her employer covered the other 75%. (482.20).  This means her total cost under COBRA insurance will be the entire premium covered by her and her employer ($602.75) plus the 11% administration fee charged by her state ($66.30) which amounts to a COBRA insurance premium cost of $669.05.

Could Henry, Luisa, and Sarah Saved Money by Looking At Other Health Insurance Options? Yes!

Many people simply believe that COBRA insurance is the best option because they have heard there is no way they can get coverage that is as good through a private company.  That is simply not true for most people.  Given that group health insurance plans at employers cover both healthy and (many) unhealthy people, the rates are generally much higher than what a generally healthy person could get on their own.  In fact, most people find that they can save over 65% by using a private plan.

Want to find out if you can save money and still get great coverage?  Get a quote using the form below.  It is free, only take a few minutes, and there is absolutely no obligation to sign up for anything.  Instead it will give you multiple options for insuring yourself or your family, likely at a huge savings.

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