Cobra Cost Calculator
Estimate COBRA health insurance costs after job loss compared to marketplace plans. Enter values for instant results with step-by-step formulas.
Formula
COBRA Monthly = Employer Premium x 1.02
COBRA requires payment of 102% of the full group health plan premium (the employer and employee portions combined, plus a 2% administrative fee). Marketplace subsidies are calculated based on income relative to the Federal Poverty Level.
Worked Examples
Example 1: Individual Coverage After Job Loss
Problem: An individual with a $600/month employer premium loses their job and needs 6 months of coverage. Marketplace alternative costs $450/month. Monthly income from unemployment is $2,800.
Solution: COBRA monthly = $600 x 1.02 = $612\nCOBRA 6-month total = $612 x 6 = $3,672\nMarketplace 6-month total = $450 x 6 = $2,700\nDifference = $3,672 - $2,700 = $972\nIncome as % of FPL = ($2,800 x 12) / $15,060 = 223%\nEstimated subsidy at 223% FPL = ~70% = $315/mo\nSubsidized marketplace = $450 - $315 = $135/mo\nSubsidized total = $135 x 6 = $810
Result: COBRA: $3,672 | Marketplace: $2,700 | With Subsidy: $810 | Best option: Marketplace with subsidy saves $2,862
Example 2: Family Coverage Comparison
Problem: A family with a $1,500/month employer premium needs 12 months of coverage. Marketplace family plan costs $1,200/month. Monthly income is $6,000.
Solution: COBRA monthly = $1,500 x 1.02 = $1,530\nCOBRA 12-month total = $1,530 x 12 = $18,360\nMarketplace 12-month total = $1,200 x 12 = $14,400\nDifference = $18,360 - $14,400 = $3,960\nIncome as % of FPL = ($6,000 x 12) / $15,060 = 478%\nAt 478% FPL, no subsidy applies\nCOBRA as % of income = $1,530 / $6,000 = 25.5%
Result: COBRA: $18,360 | Marketplace: $14,400 | Savings: $3,960 | COBRA consumes 25.5% of income
Frequently Asked Questions
What is COBRA insurance and who is eligible?
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows employees and their dependents to continue their employer-sponsored health insurance coverage after experiencing a qualifying event such as job loss, reduction in work hours, divorce, or death of the covered employee. To be eligible, the employer must have had 20 or more employees and must have offered a group health plan. COBRA coverage is available for 18 months after most qualifying events, 29 months if the beneficiary is disabled, and up to 36 months for dependents after events like divorce or the employee becoming eligible for Medicare. The key benefit is continuity of coverage with the same doctors, network, and plan benefits you had while employed.
How much does COBRA cost compared to employer-sponsored insurance?
COBRA premiums are significantly higher than what employees pay for employer-sponsored insurance because the employee must pay the entire premium amount plus a 2% administrative fee. When employed, most workers pay only 20-30% of their health insurance premium, with the employer covering the remaining 70-80%. Under COBRA, you pay 102% of the total plan cost. For example, if the full premium for individual coverage is $600 per month and your employer was paying $420 while you paid $180, your COBRA cost would be $612 per month, representing a 240% increase in your out-of-pocket expense. For family coverage, this increase can be even more dramatic, with monthly premiums commonly exceeding $1,500 to $2,000 under COBRA.
What are marketplace alternatives to COBRA coverage?
The Health Insurance Marketplace (healthcare.gov) offers an important alternative to COBRA that may be significantly cheaper, especially for those who qualify for premium tax credits (subsidies). Losing employer coverage triggers a Special Enrollment Period of 60 days, allowing you to purchase a marketplace plan outside of open enrollment. Marketplace plans come in metal tiers: Bronze (lowest premium, highest cost-sharing), Silver, Gold, and Platinum (highest premium, lowest cost-sharing). Premium subsidies are available based on income and can dramatically reduce monthly costs. Additionally, silver-tier plans offer extra cost-sharing reductions for those earning between 100% and 250% of the federal poverty level. Many people find marketplace plans with subsidies cost significantly less than COBRA while providing comparable or better coverage.
How do I decide between COBRA and a marketplace plan?
The decision between COBRA and a marketplace plan depends on several factors including cost, provider access, ongoing medical needs, and expected duration of need. Choose COBRA if you are in the middle of treatment with specific doctors who are not available on marketplace networks, if you have already met your deductible for the year, or if the short-term premium difference is manageable. Choose a marketplace plan if you qualify for premium subsidies that make it significantly cheaper, if your income has dropped substantially after job loss, if you need coverage for more than 18 months, or if your COBRA premium would consume more than 10% of your monthly income. You have 60 days from your job loss to elect COBRA and the same 60 days for a marketplace Special Enrollment Period, so compare both options carefully before deciding.
Are there any tax benefits or subsidies for COBRA premiums?
Currently there is no ongoing federal subsidy specifically for COBRA premiums, though temporary subsidies have been enacted during economic downturns such as the COBRA subsidy included in the American Recovery and Reinvestment Act of 2009 and the American Rescue Plan Act of 2021. However, COBRA premiums may be tax-deductible if you itemize deductions and your total medical expenses exceed 7.5% of your adjusted gross income. If you are receiving unemployment benefits, the premiums can be included in that medical expense calculation. Additionally, some states offer their own mini-COBRA laws that extend coverage to employees of smaller companies not covered by federal COBRA. It is worth noting that choosing a marketplace plan instead may provide much larger effective subsidies through premium tax credits, potentially saving hundreds of dollars per month compared to COBRA.
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