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How Much Does COBRA Cost in 2024?

February 5th, 2024 | 3 min. read

By Kristi Feist

The period following a job loss or other qualifying event is often marked by uncertainty concerning how to maintain health insurance. The prospect of losing coverage can be scary, making COBRA's role in providing continuity of care all the more vital. Yet, the decision to elect COBRA coverage is frequently overshadowed by concerns about its cost. High premiums can be a barrier for many, making it difficult to decide whether COBRA is the right choice. This uncertainty can add to the stress of an already challenging time.

This is where Payday HCM's expertise becomes invaluable. We don't just offer our knowledge; we offer personalized guidance. We understand that each individual's situation is unique, and navigating health insurance options during times of change can be overwhelming. This article will empower you with knowledge, ensuring you have all the information needed to make informed decisions about your healthcare coverage. Leveraging this information about COBRA and its cost structure will demystify the process, making it more accessible and less daunting for everyone involved.

We will guide you through the complexities of COBRA insurance, offering insights and advice that draw on our extensive experience in the field. With us, you're not just accessing information; you're gaining a partner dedicated to your well-being and financial security during times of transition. We're here to help you assess how COBRA fits into your financial picture and provide the tools you need to navigate your health insurance options confidently.

Understanding COBRA Insurance

COBRA, the Consolidated Omnibus Budget Reconciliation Act, was established in 1986 as a critical safeguard for employees and their families facing the loss of health benefits due to job loss, reduced hours, or other significant life transitions.

This federal law enables individuals to maintain their existing group health plan for a limited period, typically 18 to 36 months, depending on the qualifying event. COBRA's primary aim is to provide a temporary but vital bridge to new employment or alternative health insurance options, ensuring that individuals do not have health coverage during pivotal times of change.

Eligibility and Coverage

Eligibility for COBRA continuation coverage is determined by several factors, including the size of the employer and the reason for the loss of health coverage. Generally, COBRA is available to employees of private-sector companies with 20 or more employees and some state or local government employers.

However, only some employees will qualify for COBRA, and the coverage period can vary, offering a crucial lifeline to those navigating the gap between jobs or seeking alternative health insurance solutions.


Breaking Down COBRA Costs

One of the most pressing questions for individuals considering COBRA is, "How much will it cost?" The answer is not straightforward, as COBRA costs can vary widely depending on several factors. Understanding these factors can help you estimate your potential costs and make an informed decision.

Premium Costs

The premium for COBRA coverage is typically the total cost of the health plan, which includes both the portion previously paid by the employer and the portion paid by the employee, plus an administrative fee.

Under COBRA, individuals must pay up to 102 percent of the plan's cost. This significant increase from what employees might be used to paying while employed can be a shock. For many, this is the most critical consideration when deciding whether or not COBRA is viable.

Factors Influencing COBRA Premiums

Several factors can influence the cost of COBRA premiums, including the type of health plan, the coverage level (individual or family coverage), and the geographic location. Any changes in the health plan's costs to the employer will also affect the COBRA premium.

You must contact your plan administrator for accurate and up-to-date information about your COBRA costs. The average monthly cost of COBRA Insurance premiums ranges from $400 to $700 per individual. Varying state-by-state, you can always access the cost at COBRA. Currently, New Mexico costs $389.

Comparing COBRA with Other Health Insurance Options

When enrolling in COBRA, it's wise to compare it with other health insurance options. Marketplaces established by the Affordable Care Act (ACA), Medicaid, or even new employer-sponsored health insurance may offer more affordable alternatives.

Each option has its own benefits, costs, and eligibility requirements, making it essential to research and compare these alternatives to COBRA thoroughly.

Benefits of COBRA

Despite often being more expensive, COBRA has distinct advantages. It allows individuals to maintain their current coverage, which means keeping the same network of healthcare providers and not having to start over with a new deductible. COBRA can be a valuable option for those with ongoing healthcare needs or those who prefer continuity of care.

Exploring Alternatives

The ACA marketplace offers a range of health insurance plans with varying levels of coverage and costs. Subsidies may be available based on income, making some plans more affordable than COBRA.

Medicaid is another option for limited-income individuals, providing low-cost or free coverage. Finally, if you're starting a new job, check the eligibility period for the new employer's health plan, as it might be shorter than expected.


Take Control of COBRA and Thrive with Your Benefits

It's paramount to remember COBRA's essential role in bridging the gap in health insurance coverage during significant life transitions. This safety net, while potentially costly, ensures that individuals and their families can maintain their health benefits for a limited time after experiencing job loss, a reduction in hours, or other qualifying events.

The decision to elect COBRA coverage should be made with a comprehensive understanding of its costs, benefits, and available alternatives, ensuring you make the most informed choice possible for your situation.

Making an informed decision about COBRA involves carefully weighing its costs against your healthcare needs and financial capabilities. You must thoroughly review your COBRA notification, understand the specifics of your coverage, and be aware of the deadlines. As always, Payday HCM can help you understand COBRA further and learn how we can be that guiding hand.

Kristi Feist

As a seasoned veteran in the industry and with Payday HCM, Kristi maintains a 1000+ client portfolio with a 98% retention rate. As Vice President of the DSO Division, Kristi works with hundreds of DSO-like companies to adopt best practices around the use of payroll technology, implementing processes and empowering employees of DSOs to use the technology.