Why COBRA can look more than three times higher

An active employee often sees only the employee contribution deducted from pay. The employer can be paying a larger share in the background. Under federal COBRA, a qualified beneficiary usually becomes responsible for the full cost of coverage—the employee share plus the employer share—and the plan can add up to 2%. In the default example, $600 plus $1,400 creates a $2,000 plan cost. At 102%, the monthly continuation premium is $2,040, which is $1,440 more than the old payroll deduction.

The calculator starts with the two visible pieces so the price jump is explainable. If the employer’s contribution is unknown, use the COBRA election notice, benefit statement, Form W-2 informational health-coverage amount with caution, or ask the plan administrator. The W-2 amount is not always the same coverage tier or billing basis needed for a monthly quote.

18 months, 29 months, or 36 months?

Federal COBRA maximum duration depends on the qualifying event and beneficiary. Termination of employment for reasons other than gross misconduct, or reduction in hours, commonly provides up to 18 months. Certain events affecting a spouse or dependent—such as divorce, legal separation, death of the covered employee, or a dependent losing dependent status—can provide up to 36 months. Medicare-related timing and a second qualifying event can add complexity.

A qualifying Social Security disability determination can extend an 18-month period by 11 months, for a total of 29. The disability must meet federal timing and notice requirements. During months 19 through 29, the plan may charge up to 150% of the coverage cost while the disabled qualified beneficiary remains covered. If that disabled person is not covered during the extension, DOL guidance says the premium for other qualified beneficiaries cannot exceed 102%.

The calculator does not add an 11-month disability extension to a 36-month event. It applies the extension only to the 18-month route. Actual coverage can end sooner because premiums are not paid, the employer stops maintaining a group plan, Medicare entitlement or other coverage rules apply, or a disability determination changes.

Total runway cost is a budget stress test

The default runway costs $2,040 for each of 18 regular months, or $36,720. The qualifying disability-extension phase costs $3,000 for each of 11 months, or $33,000. Together, the modeled maximum is $69,720 across 29 months. This total assumes the premium never changes. In practice, group-plan rates can reset during open enrollment or a new plan year, and qualified beneficiaries can change coverage tiers under plan rules.

A total maximum does not mean a person should prepay or expects to remain for every month. COBRA can be used as a bridge until new employer coverage, Medicare, a Marketplace plan, Medicaid, or another group plan begins. Compare options over the same dates, family members, deductible exposure, provider network, prescription formulary, and out-of-pocket maximum. A cheaper premium can be more expensive overall when care needs are high.

Federal COBRA may not be the only continuation rule

Federal COBRA generally applies to private-sector group health plans maintained by employers with at least 20 employees on more than 50% of typical business days in the previous calendar year, plus covered state and local government plans under related rules. Church plans and federal employee plans follow different frameworks. States can have mini-COBRA or continuation laws affecting smaller employers, insured plans, or extra periods. This calculator prices the federal percentage structure only.

Marketplace enrollment can have a special-enrollment window after loss of job-based coverage. Premium tax credits depend on projected household income and other eligibility rules. Voluntarily dropping COBRA later may not always create a new Marketplace special-enrollment opportunity outside open enrollment, while exhaustion of COBRA can. Timing deserves attention before electing or ending coverage.

Health premiums and medical expenses can also have federal tax consequences, especially for self-employed people or taxpayers itemizing medical expenses.

A same-coverage comparison checklist

1. Use the exact current coverage tier: employee only, employee plus spouse, employee plus child, or family.
2. Add the employer and employee contribution for that same tier and billing month.
3. Confirm the qualifying event and maximum period for each family member.
4. Do not apply 150% unless the disability extension and covered-disabled-beneficiary condition allow it.
5. Compare total premiums, deductibles already met, provider network, prescriptions, and maximum out-of-pocket cost.
6. Record election, notice, and payment deadlines and preserve proof of delivery and payment.
7. Re-run the budget when the plan announces a new premium.

Compare alternatives with a claims-aware worksheet

Start with premium cost over the exact bridge period. If new employer coverage begins in four months, compare four COBRA premiums with four Marketplace premiums, not the 18-month maximum. Next add remaining deductible and out-of-pocket exposure. A family that has already met most of the group-plan deductible can find COBRA more valuable late in the plan year, even when its premium is higher. A new plan may reset the deductible to zero dollars paid.

List recurring prescriptions, planned procedures, behavioral-health providers, durable medical equipment, and specialists. Confirm each network and formulary directly with the new plan. “Same insurer” does not guarantee the same network. If a family member is in active treatment, ask about continuity-of-care provisions and prior authorizations. A pure premium comparison can hide a large treatment interruption or out-of-network bill.

Then model household members separately. COBRA election rights belong to qualified beneficiaries, so a spouse or dependent may choose coverage independently in many situations. One person may need COBRA for an established care team while another uses a Marketplace or new employer plan. The calculator prices one coverage tier; it does not assume the whole family must choose the same option.

Finally, check subsidy and tax assumptions. Marketplace premium tax credits depend on projected annual household income and access to other qualifying coverage. A severance payment, unemployment compensation, retirement distribution, or new job can change that projection. Use official Marketplace tools for eligibility and reconcile income estimates during the year. Do not subtract an assumed premium tax credit from COBRA—the federal COBRA premium itself is not priced through the Marketplace credit formula.

Frequently asked questions