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How Much Does COBRA Insurance Cost?

The Consolidated Omnibus Budget Reconciliation Act does not provide you with health insurance, but it does allow you to continue participating in your former employer's group health care plan. The cost of continued participation varies from employer to employer because of variations in health plans costs. However, your premium cannot exceed 102 percent of the standard cost for participating in the plan.

  1. History

    • In 1986, Congress amended the already in place Employee Retirement Income Security Act when it passed the Consolidated Omnibus Budget Reconciliation Act. Before the act passed, individuals were no longer able to participate in group health care plans after experiencing a separation of service. COBRA protects the rights of those people as well as others who become otherwise ineligible to continue participating in group plans. Amendments were also made to the Internal Revenue Service's tax code to ensure participants did not suffer adverse tax consequences as a result of buying insurance under COBRA.

    Health Coverage

    • If you participate in a group health care plan, you and your employer split the cost of the monthly premiums. Generally, your employer pays at least 50 percent of your insurance premium. When you become ineligible to participate in a plan, your employer no longer pays part of your monthly premium. Consequently, you are responsible for paying the entire premium if you want to continue coverage. Because of administrative costs involved in extending your coverage, COBRA provisions enable insurance providers to bill you an extra 2 percent so your total premium can cost up to 102 percent of the standard amount.

    COBRA Enrollment

    • You can only obtain health insurance under COBRA if you were enrolled in your employer's health insurance plan when you left your job. COBRA provisions only apply to plans offered by employers with 20 or more employees and you are only entitled to continued coverage if other employees are still actively participating in the plan. If your employer discontinues the plan, you cannot enroll in it. You are entitled to 18 months of continued coverage in COBRA if you experienced a job loss or lost health coverage due to a reduction in working hours. You are entitled to 36 months of coverage if you lost insurance coverage due to a death, divorce, legal separation or if you lose coverage because you are no longer classified as a dependent child under the terms of a health care plan.

    Considerations

    • When you opt to continue coverage under your current health care plan, you can continue going to the same medical treatment facilities and in-network providers you've used in the past. However, while group health care plans are often less expensive than individually purchased insurance plans, some group health plans are costly if the employer isn't paying for part of it. Shop around for other health care plans before deciding whether to continue your current coverage under COBRA.

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