Navigating COBRA Continuation Coverage

When employment ends or a qualifying life event occurs, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue their employer-sponsored health insurance for a limited time. Although COBRA preserves the same benefits and provider network, it typically comes with a dramatic increase in premiums because the employer no longer subsidizes the cost. This calculator helps estimate the monthly and total expenses of keeping the plan. By entering the portion you previously paid, the amount your employer contributed, the administrative fee, and the number of months you expect to remain on COBRA, the tool computes the new monthly premium and cumulative cost. Understanding these figures empowers families to compare COBRA against alternatives such as marketplace policies, spouse coverage, or short-term plans before the enrollment window closes.

The first input requests your monthly premium contribution while employed. This is usually the amount deducted from your paycheck, reflecting the share of the overall premium you paid. The second field asks for the employer’s contribution. Many employers pay a substantial part of the premium—sometimes seventy to eighty percent—and losing that support can double or triple the cost. COBRA regulations permit insurers to charge up to one hundred two percent of the combined employee and employer premium to cover administrative overhead. The default admin fee in this calculator is two percent, but you can adjust it if your plan uses a different percentage. Finally, the months field lets you select the expected duration of coverage. Standard COBRA lasts eighteen months, though extensions up to thirty-six months may apply in certain circumstances.

The calculation is straightforward. The total unsubsidized premium equals the sum of the employee and employer portions. An administrative surcharge is then applied to this total to obtain the monthly COBRA premium. Multiplying by the number of months yields the aggregate cost of continuation coverage. This relationship can be expressed mathematically as shown below:

In this formula, E represents the employee portion, P the employer portion, and F the administrative fee percentage. The cumulative cost for a given number of months is simply the monthly cost multiplied by the duration. The table below provides an example of how different employer contributions influence the monthly amount when the employee share is $200 and the admin fee is two percent. Observing how quickly costs escalate when employer contributions disappear highlights why many workers seek alternative coverage.

Employer Portion	Total Monthly Premium	COBRA Monthly Cost (2% Fee)
$100	$300	$306
$300	$500	$510
$500	$700	$714

One major advantage of COBRA is continuity of care. Because the same group plan remains in force, you can keep your existing doctors and prescriptions without disruption. For people in the middle of complex treatments, surgeries, or pregnancies, this continuity can outweigh the higher premiums. COBRA also prevents gaps in coverage, which is important when avoiding penalties or protecting against unforeseen medical emergencies. However, the cost can be prohibitive, especially for those who have lost income. By using this calculator, you can quantify the trade-off between continuity and affordability.

The tool operates entirely in the browser using JavaScript, ensuring that no personal health information is transmitted to external servers. The simplicity of the calculation belies the complexity of evaluating health insurance options. Premiums are only part of the picture; deductibles, provider networks, out-of-pocket maximums, and subsidies available through the health insurance marketplace also influence the optimal decision. After obtaining the COBRA estimate, you may wish to explore marketplace plans to determine whether an Affordable Care Act subsidy could make individual coverage cheaper. Households with reduced income after job loss often qualify for significant premium tax credits and cost-sharing reductions.

Another factor to consider is the timing of enrollment. COBRA election notices typically provide sixty days to opt in, but coverage can be retroactive to the date of the qualifying event as long as premiums are paid. This creates a strategic option: you can wait to see if health expenses arise during the decision window. If no costs occur, you might choose a marketplace plan instead. If a major medical event happens, you can elect COBRA retroactively and pay the back premiums, thereby preventing a coverage gap.

Families should also weigh the duration of coverage. Standard COBRA coverage ends after eighteen months, though certain events—such as a second qualifying event or disability—can extend the period to twenty-nine or thirty-six months. If you expect to secure new employment within a few months, COBRA may serve as a temporary bridge. But if you anticipate longer unemployment or plan to retire before Medicare eligibility, a marketplace policy or spouse’s employer plan could offer more sustainable premiums.

While COBRA premiums may be high, they are often tax-deductible as medical expenses if you itemize and the total exceeds a certain percentage of your adjusted gross income. Self-employed individuals can usually deduct COBRA premiums directly from their income, further reducing the effective cost. This calculator does not account for tax effects, but recognizing potential deductions can aid in financial planning. Additionally, Health Savings Account funds can typically be used to pay COBRA premiums, providing a tax-advantaged way to cover the expense.

To emphasize the magnitude of COBRA costs, consider a hypothetical worker whose employer pays seventy-five percent of a $800 monthly premium. The employee’s share is $200. Under COBRA, the worker must pay the entire $800 plus a two percent fee, resulting in a monthly cost of $816. Over eighteen months, the total reaches $14,688. If the worker qualifies for a marketplace plan costing $350 per month after subsidies, the savings over the same period would exceed $8,500. Numbers like these illustrate why informed decision-making is crucial during the transition from employer coverage.

By experimenting with different input values, you can model various scenarios, such as negotiating a severance package that includes premium assistance, or comparing the cost of extending coverage for dependents versus finding separate policies for them. The ability to rapidly test these options empowers households to make choices aligned with their financial goals and healthcare needs.

Ultimately, this calculator serves as an educational resource to demystify COBRA pricing. It cannot capture every nuance of health insurance law, and actual premiums may vary based on plan design, location, and administrative arrangements. Nonetheless, the tool provides a solid starting point. Whether you are contemplating a career change, facing an unexpected job loss, or transitioning to retirement, understanding the financial implications of COBRA is a critical step in safeguarding your health and your budget.

While COBRA offers immediate continuation of benefits, it is not the only option. Marketplace plans can sometimes deliver similar coverage at a fraction of the price, particularly when federal subsidies are available. Short-term health plans, while less comprehensive, may provide temporary protection for healthy individuals awaiting new employment. Spousal coverage through a partner’s employer is another avenue. This calculator gives you the numbers needed to compare these paths side by side.

Always review the fine print of your insurance documents and consult with benefits specialists or licensed brokers before making a final decision. The peace of mind that comes from uninterrupted coverage must be balanced against the reality of premium costs. With the insights provided here, you are better equipped to navigate that balance.