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What Is the Average Premium With Cobra Insurance?

COBRA insurance is an extension of an employer-sponsored insurance policy. This type of policy will cover a former employee and his dependents while he looks for a new job so that there is no lapse in coverage. However, COBRA coverage can be expensive. The cost of a COBRA insurance premium varies based on the cost of the employer-sponsored policy.

  1. About COBRA

    • COBRA insurance provides the beneficiary with the same coverage he has been receiving. This type of coverage can extend for up to 18 months for the employee and for up to 36 months for the employee's dependents. You can purchase COBRA coverage for most group health plans. However, some small-business health plans may be exempt from COBRA.

    Qualifying for COBRA

    • In order to qualify for COBRA insurance, the employee or employee's dependents must have lost coverage due to a qualifying event. Qualifying events include death of the covered employee, termination of employment, divorce or legal separation from the employee, the employee becoming eligible for Medicare or a dependent child losing his status as a dependent of the employee. COBRA coverage may not be available to employees who lose their jobs for misconduct.

    Calculating COBRA Premiums

    • When you obtain insurance through an employer's group health plan, your employer will pay part or all of the premium. However, if you choose to purchase COBRA insurance coverage, you will be responsible for the entire cost. Your premium for COBRA insurance will be equal to the cost your employer paid for your coverage plus the cost you paid. You will also have to pay a 2 percent administration fee. For example, if your employer pays $300 per month for your insurance and you pay an additional $100, COBRA insurance would cost you $408 per month.

    Considerations

    • Since COBRA insurance covers you from the day you lose employment, the first premium you pay will often be higher than subsequent premiums. If your previous employer stops offering a group health plan or goes out of business, your COBRA coverage will end. Coverage will also end if you begin receiving Medicare benefits or obtain insurance coverage from another policy. In some cases, there may be less expensive alternatives to COBRA insurance.

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