COBRA--Keeping Your Insurance After Your Job Ends

The former employee usually needs to pay the entire premium for his or her group health plan coverage. A plan may charge a qualified beneficiary up to 102% of the “applicable premium” for COBRA continuation coverage. This amount reflects the entire premium (that may have previously been divided up in some manner between the employer and employee) plus a 2% administrative fee.

While the rate may seem very high, typically group rates are less expensive than an individual plan might be.

Example: Prior to Kristy's termination of employment, she paid $400 per month for family insurance coverage. Her employer paid another $600 per month for Kristy's coverage as part of her employee benefits package. Kristy's “applicable premium” for her COBRA continuation coverage could be up to $1020 per month ($400 + $600 + 2% of the total premium).