What is COBRA?
COBRA Overview
Enables qualified, recently separated employees to continue their group coverage by assuming responsability for the total premium (plus a 2% administrative fee) for their coverage. COBRA generally is available for qualified individuals leaving a company with 20 or more employees. Some states have created COBRA-like programs for groups of less than 20 full time employees.

COBRA Coverage
  • Allows for an extension of group benefits for a period of up to 18 months in most cases. In some instances COBRA can be extended for up to 36 months.
  • You get the same coverage as your former employer offers existing employees (assuming your former employer is still in business).
  • You pay the full cost of the coverage, plus a 2% administrative fee.
  • Full premium means any amount you contributed, PLUS what your employer contributed, PLUS the 2% fee.
  • Exhausting COBRA coverage is required for HIPAA eligibility.

Cost: Employer Sponsored vs. COBRA
While Employed Enrolled in COBRA
  • Family of four, age 30-39
  • PPO, $250 deductible
  • Monthly premium
    • $731.00
  • Employer pays 90%
    • $657.90
  • You pay 10%
    • $73.10
  • Family of four, age 30-39
  • PPO, $250 deductible
  • Monthly premium
    • $731.00
  • You pay 102%
    • $745.62


COBRA Advantages and Disadvantages
Advantages:
  • Typically richer "large group" type benefits
  • Guaranteed coverage for at least 18 months
  • Counts as creditable coverage for HIPAA purposes
Disadvantages:
  • Generally expensive (102% of the total premium)
  • Limited duration. If you develop a medical condition during the 18 month period, your choices are limited once your COBRA coverage expires.

Note: If you choose not to elect continuation of group coverage under COBRA you will loose valuable rights under HIPAA.

COBRA Comparison | COBRA FAQ | Glossary