COBRA premium rates are simply the sum of the employer's portion of the cost of coverage plus the employee's portion of the cost of coverage plus an administrative fee. The cost of coverage under COBRA is basically the same as the total cost of coverage when it was previously provided through an employer plan. But since the employer no longer pays a portion of the cost, the individual must pay the entire cost. Most health plans add a 2% administrative fee which adds another $10 to the cost of a $500 premium.
Although the actual rate will come directly from the plan administrator and rates will vary sharply for different health plans, these are approximate national estimates according to Kaiser Foundation and other sources for 2012:
- single coverage - $550 per month
- family coverage - $1350 per month
The premium reduction subsidy previously available offered the American
Recovery and Reinvestment Act of 2009 is no longer available.
COBRA alternatives also range in price and premiums are available online through the quote engines on the Freedom Benefits insurance exchange. The average cost of an issued alternative policy is about half of the price of COBRA listed above.
Although some health insurance policies are priced lower than these figures - perhaps less than $100 per month - it is important to realize that the premium reduction is achieved by reducing the benefits available. Although these "mini-med" policies are increasingly popular, they do not provide the same level of protection as COBRA and COBRA alternative short term major medical plans.
COBRA continuation coverage may provide temporary protection when changing jobs, waiting for other coverage, going through a divorce or negotiating other life transitions. Choosing the right health insurance is crucial to protect your health and financial security.