COBRA costs up to 102 percent of the full plan premium, which is why a $150 paycheck deduction becomes a $700 monthly bill.
The employee pays the whole premium, the share the employer used to cover plus the share the employee paid, plus an administrative fee of up to 2 percent. These worked examples show the arithmetic.
How the COBRA premium is built.
The Standard Rate: 102 Percent
COBRA premium can be up to 102 percent of the total cost of coverage, which is the employer share, the employee share and a 2 percent administrative fee. On a plan that costs $700 a month for one person, the COBRA premium is up to $714.
A Family Example
If family coverage costs $2,100 a month in total, the COBRA premium is up to $2,142. The employee paid perhaps a third of that before and now pays all of it.
The Disability Extension: 150 Percent
If a qualified beneficiary is found disabled by the Social Security Administration, months 19 through 29 can be billed at up to 150 percent. On a $700 plan that is up to $1,050 a month.
Employers Can Charge Less
The 102 percent figure is a ceiling, not a requirement. An employer may subsidize some or all of the premium, for example as part of a severance agreement.
The Rate Is Set in Advance
COBRA premiums are fixed for a 12-month determination period, so the rate cannot be raised mid-year except in limited cases. The plan sets the figure before the period begins.
Self-Funded Plans Use a Reasonable Estimate
A self-funded plan sets the COBRA premium from a reasonable estimate of the cost of coverage, using an actuarial method or past cost. The same 102 percent cap applies.
Why COBRA looks so expensive to employees.
The Employer Share Disappears
While employed, the employee paid only a share of the premium. On COBRA they pay the entire cost, so the number is several times larger.
Premiums Are After Tax in Most Cases
COBRA premiums are usually paid with after-tax dollars. The tax treatment can differ from a payroll deduction, so employees should be told.
There Are Alternatives
Losing job-based coverage opens a 60-day special enrollment period on the Marketplace. Comparing price and networks before electing is worth the time.
The Window Is Short
Employees generally have 60 days to elect and 45 days after electing to pay the first premium. The dates matter more than the price for many people.
What to settle before the first COBRA election.
What premium will we charge and when was it set?
Document the rate, the determination period and the method. Self-funded plans especially need the calculation on file.
Do we want to subsidize any COBRA?
A subsidy changes cost, tax and discrimination considerations. Decide the policy before the first separation.
Who bills and collects?
The employer, a COBRA administrator or the carrier may handle billing. Decide who tracks payments and grace periods.
What does the employee see?
Provide a one-page cost illustration with the monthly price, due dates and the Marketplace alternative.
The questions people ask about COBRA cost.
How much does COBRA cost?
Up to 102 percent of the full cost of the plan, meaning both the employer and employee share plus a 2 percent fee. On a plan that costs $700 a month for one person, that is up to $714.
Why is COBRA so expensive?
Because the employee pays the entire premium. The employer share they did not see while employed now shows up on the bill.
How much is COBRA for a family?
It depends on the plan. If total family coverage costs $2,100 a month, COBRA can be up to $2,142.
Can COBRA cost more than 102 percent?
Yes, in one case. If a qualified beneficiary is disabled, months 19 through 29 can be billed at up to 150 percent.
Can my employer pay part of my COBRA?
Yes. The 102 percent is a ceiling, and an employer can subsidize some or all of it, often through a severance agreement.
Does the COBRA premium change during the year?
Generally no. COBRA premiums are set for a 12-month determination period, with limited exceptions.
How long do I have to pay my first COBRA premium?
Generally 45 days after you elect COBRA. Ongoing premiums have a grace period of at least 30 days.
Is COBRA cheaper than the Marketplace?
Sometimes, sometimes not. Compare the monthly premium, deductible and network, and remember that losing job-based coverage opens a 60-day Marketplace special enrollment period.
General information about COBRA premiums, not legal advice. Plan-specific questions belong with ERISA counsel, and we will bring them in.
Where these details come from.
This page summarizes public guidance reviewed in October 2026. Rules change, so confirm current requirements with counsel.
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