To calculate your COBRA cost, multiply the total monthly premium for your health plan by 1.02. That total premium is the full amount your employer and you were paying combined while you were employed, and the extra 2% is an administrative fee the plan is allowed to add. On the average employer-sponsored family plan, which runs about $2,249 per month in total premiums, COBRA works out to roughly $2,294 a month.1KFF. 2025 Employer Health Benefits Survey The number shocks most people because their pay stub only ever showed the employee share.
The 102% Formula Worked Out
Federal law caps what a plan can charge for COBRA at 102% of the applicable premium.2Office of the Law Revision Counsel. 26 U.S. Code 4980B – Failure to Satisfy Continuation Coverage Requirements of Group Health Plans The 2% covers administrative costs. “Maximum” is the operative word — a plan could charge less, but almost none do.
Using the 2025 KFF Employer Health Benefits Survey averages (annual premiums of $9,325 for single coverage and $26,993 for family coverage):
- Individual plan: $777 monthly total premium × 1.02 = $792.54 per month
- Family plan: $2,249 monthly total premium × 1.02 = $2,293.98 per month
Your actual number depends on your specific plan, your coverage tier, and where you live. The 1.02 multiplier is the same regardless.
Finding Your Total Premium
The formula is easy. The hard part is knowing what number to plug into it, because employers typically pay 70% to 80% of the total and that share never appeared on your paycheck.3Centers for Medicare & Medicaid Services. COBRA Continuation Coverage Under COBRA you pay both shares plus the 2% fee.
Three places to find the full premium:
- Your Summary of Benefits and Coverage document, which the plan had to give you at enrollment. It lists the full monthly cost.
- Your COBRA election notice, which should state the premium amount for your coverage tier.
- The plan administrator or your former HR department, if you ask for the total monthly premium for your tier (individual, employee-plus-spouse, or family).
If Your Former Employer Self-Insures
Some companies fund claims directly rather than buying insurance from a carrier. For a self-insured plan, the “total premium” is replaced by an “applicable premium” calculated one of two ways: an actuarial estimate of expected costs, or the actual cost the plan incurred covering similarly situated employees during the prior year.4eCFR. 26 CFR 54.4980B-8 – Paying for COBRA Continuation Coverage The 102% cap still applies. Ask the plan administrator for the applicable premium figure; you cannot back into it from a pay stub.
Budget for the Retroactive Lump Sum
The monthly number is only part of what you’ll actually owe on day one. You have 60 days from the later of your qualifying event or the date you receive your election notice to decide whether to enroll.5Centers for Medicare & Medicaid Services. COBRA Continuation Coverage Questions and Answers Whenever you elect, coverage is retroactive to the date you lost your employer plan, so you owe premiums for every month in between.
Example: you lose coverage March 1 and elect COBRA on April 25. March and April premiums both come due. On a family plan, the first bill could easily hit $4,500 or more. The plan cannot demand payment before 45 days after your election, but the retroactive months still have to be paid.2Office of the Law Revision Counsel. 26 U.S. Code 4980B – Failure to Satisfy Continuation Coverage Requirements of Group Health Plans Plan for that lump sum before you sign.
When Your Monthly Cost Can Change
The 102% multiplier is fixed. The base premium underneath it is not. When your former employer’s plan renews its annual contract, any rate increase for active employees also flows through to COBRA participants.3Centers for Medicare & Medicaid Services. COBRA Continuation Coverage If the family premium jumps from $2,249 to $2,400 at renewal, your new COBRA cost becomes $2,400 × 1.02 = $2,448. Federal rules require premiums to be set in advance for each 12-month cycle, so surprise mid-year changes are rare.6U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
COBRA participants get the same open enrollment rights as active employees. If your former employer offers a cheaper plan option, you can switch during open enrollment and lower your cost.6U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers If the employer switches carriers entirely, the new plan’s pricing becomes your new baseline. Watch for notices from the plan administrator around renewal.
The 150% Rate for Disability Extensions
Standard COBRA lasts 18 months after a job loss or reduction in hours. If a qualified beneficiary is determined disabled by the Social Security Administration within 60 days of the qualifying event, the coverage period extends to 29 months, and the pricing changes.7U.S. Department of Labor. An Employee’s Guide to Health Benefits Under COBRA
For the first 18 months, you pay the normal 102% rate. Starting in month 19, the plan can charge up to 150% of the applicable premium for any period the disabled person is covered.4eCFR. 26 CFR 54.4980B-8 – Paying for COBRA Continuation Coverage On a $2,249 family plan, monthly cost rises from $2,294 to $3,374 — a 47% jump.
If non-disabled family members continue the extension without the disabled person, the plan cannot charge more than 102% for the entire coverage period, including months 19 through 29.3Centers for Medicare & Medicaid Services. COBRA Continuation Coverage The 150% rate only applies when the disabled beneficiary is actually on the coverage. To get the extension at all, notify the plan administrator of the SSA determination within 60 days of the ruling and before the original 18-month period ends. Miss either deadline and the extension is gone.
Compare Against a Marketplace Plan Before You Commit
Before writing a check for $793 or $2,294 a month, price the ACA marketplace. Losing employer coverage triggers a Special Enrollment Period, giving you 60 days to enroll in a marketplace plan instead.8HealthCare.gov. COBRA Coverage When You’re Unemployed You are not required to take COBRA.
COBRA charges the full group rate no matter what you earn. Marketplace plans come with premium tax credits that scale with household income, and many people who just lost a job see a significant income drop for the year. A subsidized silver plan can cost a fraction of COBRA. The tradeoff: COBRA keeps your exact plan, network, and benefits, which matters if you are mid-treatment with a specialist who is not in any marketplace network.9HealthCare.gov. Getting Health Coverage Outside Open Enrollment
Because you have up to 60 days to elect COBRA and coverage is retroactive, you can wait. If a major medical expense hits during that window, elect COBRA to cover it. If nothing happens, enroll in a marketplace plan instead. You will owe the retroactive premiums if you use the backstop.
Lowering the Effective Cost With Tax Rules
Two tax provisions can reduce what COBRA actually costs you.
COBRA premiums count as medical expenses for federal tax purposes. If you itemize on Schedule A, you can deduct the portion of your total medical and dental expenses that exceeds 7.5% of your adjusted gross income.10Internal Revenue Service. Publication 502 – Medical and Dental Expenses At $2,294 a month, family COBRA runs over $27,500 a year, which clears that threshold for many households. The deduction only helps if your total itemized deductions exceed the standard deduction, so run both numbers.
If you have a Health Savings Account, you can use HSA funds to pay COBRA premiums tax-free. HSA money generally cannot be used for insurance premiums, but COBRA continuation coverage is one of the specific exceptions the IRS carves out.11Internal Revenue Service. Instructions for Form 8889 You cannot claim a Schedule A deduction for the same premiums you paid from your HSA. Pick one.