1. What is COBRA Cost Calculation?

The COBRA (Consolidated Omnibus Budget Reconciliation Act) cost calculation determines the amount individuals must pay to continue their health insurance coverage after leaving employment. The formula includes the full premium cost plus a 2% administrative fee.

2. How Does the Calculator Work?

The calculator uses the COBRA cost formula:

Where:

• \( Premium \) — The original health insurance premium amount
• \( 1.02 \) — Represents the 102% calculation (100% premium + 2% admin fee)

Explanation: The calculation adds a 2% administrative fee to the original premium cost as allowed by COBRA regulations.

3. Importance of COBRA Cost Calculation

Details: Accurate COBRA cost calculation is essential for budgeting healthcare expenses during employment transitions and understanding the financial implications of continuing health coverage.

4. Using the Calculator

Tips: Enter your current health insurance premium amount in dollars. The calculator will automatically compute the COBRA cost including the 2% administrative fee.

5. Frequently Asked Questions (FAQ)

Q1: Why is there a 2% administrative fee?
A: COBRA allows employers to charge up to 102% of the premium cost (100% for the premium + 2% administrative fee) to cover administrative expenses.

Q2: How long can I maintain COBRA coverage?
A: Typically 18 months, but certain circumstances may qualify for extended coverage up to 36 months.

Q3: Are all health plans eligible for COBRA?
A: Most group health plans maintained by employers with 20 or more employees are subject to COBRA requirements.

Q4: When does COBRA coverage begin?
A: Coverage is retroactive to the date your original coverage ended, provided you make timely payments.

Q5: Can I change my coverage under COBRA?
A: Generally, you must receive the same coverage you had while employed, but you may have the same open enrollment rights as active employees.