What continuation actually costs, before the letter goes out.
COBRA lets a departing employee keep the same plan, at up to 102 percent of its full cost. For most people that is several times what came out of their paycheck. Enter one coverage tier at a time and see the monthly premium, the jump from what they pay today, and the total over the whole continuation period.
Use the calculator → · What COBRA costs, and cheaper options →
One tier at a time.
Employee only, employee and spouse, employee and children, and family each carry their own premium. Run the tier the person is actually enrolled in.
The employer share and the employee share combined: the total the plan costs each month for this tier.
Their current payroll deduction, converted to a monthly figure.
The 36-month events apply to the spouse and dependent children, not the employee.
Allowed, not required.
Optional. Enter 0 if the employee pays the whole premium from day one.
COBRA Premium
Source: 29 U.S.C. 1162 and U.S. Department of Labor COBRA guidance. Applies to employers with 20 or more employees; smaller employers may be covered by state continuation rules instead. General information, not legal or tax advice.
Check this year’s renewal while you are here
Enter what you pay today and what the carrier is asking for next year. You get the increase per enrolled employee, how it compares with a market yardstick, and the questions we would put to your carrier before you sign.
One formula, and the exceptions worth knowing.
The 102% Rule
A plan may charge up to 102 percent of the full premium, the employer share and the employee share together, for the same coverage active employees have. The extra 2 percent covers administration. It is a ceiling, not a requirement.
The 150% Exception
When a qualified beneficiary has a Social Security disability determination, coverage can extend from 18 to 29 months, and the plan may charge up to 150 percent of the premium for months 19 through 29. It is the only case where the 102 percent cap lifts.
Who Has to Offer It
Federal COBRA applies to employers with 20 or more employees on more than half of their typical business days in the prior calendar year, counting part-time staff as fractions. Below that, state continuation rules may apply instead. Headcount is measured across the prior calendar year, so growing or shrinking employers should check rather than assume. Counsel can confirm which rule applies if the count is close to the threshold.
Four deadlines, and who owns each one.
COBRA runs on a chain of deadlines, and each one belongs to someone different. A missed step belongs to whoever was supposed to take it.
30 Days to Tell the Plan
After a termination, a reduction in hours, a death or Medicare entitlement, the employer has 30 days to notify the plan administrator. Divorce and a child aging off are different: the family has to tell the plan, within 60 days.
14 Days for the Election Notice
The administrator then has 14 days to send the election notice. Where the employer is its own administrator, the combined limit is 44 days. A late or missing notice can cost up to 110 dollars a day in ERISA penalties, on top of any claims it leaves unpaid.
60 Days to Elect
The employee and each family member have at least 60 days to elect, counted from the later of the notice or the loss of coverage. Coverage elected inside that window is retroactive, so nobody is uninsured in between. Employers should state the deadline in the election notice and keep a record of when it was sent. A person unsure about the dates should ask the administrator early, since the window is easy to misjudge.
45 Days to Pay, Then a 30-Day Grace
The first premium is due within 45 days after the election. Each premium after that has a 30-day grace period, and coverage can end if a payment misses it. The election notice should show the due date and where to send the payment, so participants can plan ahead. Administrators often send a reminder before the grace period ends, which helps avoid avoidable loss of coverage.
COBRA notices and elections → · COBRA premium billing → · State continuation for smaller employers → · COBRA administration →
What employers ask about COBRA costs.
How much does COBRA cost?
Up to 102 percent of the full premium for the coverage tier, meaning the employer share and the employee share together. During months 19 through 29 of a disability extension, the plan can charge up to 150 percent. The employer can choose to pay part of the premium, though most plans pass the cost along to the participant. The rate should be set using a reasonable method and explained in the election notice.
How long does COBRA last?
Eighteen months after a termination or reduction in hours, 29 months with a Social Security disability determination, and 36 months for a spouse or dependent after a divorce, a death, Medicare entitlement or a child aging off the plan. The longer periods depend on the event and on proper notice to the plan. A person with questions about which period applies should ask the plan administrator, because dates can differ for each family member.
Can an employer pay for COBRA as part of severance?
Yes. Many employers cover a set number of months as part of a separation agreement. The calculator shows what that costs for each tier; how the payment is structured affects its tax treatment, so confirm that before it goes in the agreement.
Is COBRA cheaper than a Marketplace plan?
Sometimes not. Losing job-based coverage opens a 60-day special enrollment period, and income-based subsidies can bring a Marketplace plan well below the COBRA premium. COBRA keeps the same doctors and the deductible already met this year. The answer depends on income, the plan chosen, the household and how much of the deductible has been met. Employees can compare both options before electing, and a tax adviser can help with the subsidy side.
What employers ask about the cost of COBRA.
What does COBRA cost the former employee?
Up to 102% of the total cost of the coverage, which is the employer’s share plus the employee’s share, plus 2% for administration.
Why does it look so high?
Because the employer’s share is no longer being paid by the employer. The person sees the full cost of coverage for the first time.
Can an employer charge less?
Yes. Many charge less than the maximum or subsidize COBRA as part of a severance package.
Is the estimate a quote?
No. It is an estimate based on what you enter. The actual COBRA rate comes from the plan’s rates and the notice the person receives.
Does the rate change at renewal?
It can. Plans generally set COBRA premiums before each 12-month cycle and can raise them if the plan’s cost rises.
What about the disability extension?
During the 11-month disability extension the premium can be up to 150%.
Are dental and vision priced separately?
They are separate coverages with their own rates, and people can usually elect each plan on its own.
What are the alternatives if COBRA costs too much?
A spouse’s plan, with 30 days to enroll, the Health Insurance Marketplace, with 60 days before or after losing coverage, Medicaid at any time, or Medicare for those eligible. See every COBRA deadline.
Does the deductible start over?
Generally no. COBRA continues the same coverage under the same rules, so amounts already met in the plan year generally carry over.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
Laws and rules referenced
29 U.S.C. § 1162(3) — COBRA premium of up to 102 percent of the plan cost
26 U.S.C. § 4980B — COBRA continuation coverage requirements and excise tax
U.S. Department of Labor: COBRA — Employer and participant COBRA guidance
This tool gives estimates for education, not tax or legal advice. Rules change, so confirm your situation with a qualified advisor.
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