How Much Does COBRA Cost? A Plain-English Breakdown

The single most common reaction to a COBRA election notice: there has to be a typo on this premium.

There isn't. COBRA is usually far more expensive than what you paid as an employee because of how it's calculated. Here is exactly what you're paying, why, and what to compare it against.

The Formula: 102% of Full Premium

Federal law lets COBRA charge up to 102% of the full group premium. Let's break that into its parts:

• Full group premium. This is the entire cost of your health coverage — not just the portion you paid from your paycheck. It includes what your employer was paying on your behalf.
• Plus 2% administrative fee. This is the ceiling for what the plan administrator can add on top of the full premium to cover the costs of managing COBRA enrollment.

The 2% is a legal maximum, not a mandate. Some plans charge less. Most charge the full 2%.

Why It Feels So Much Higher Than What You Used to Pay

Most employees dramatically underestimate how much their health insurance actually costs, because they only see the payroll deduction. In a typical arrangement, employers cover 70-80% of the premium for employee-only coverage and 60-70% for family coverage.

So if you were paying $200/month out of your paycheck for family coverage, the full premium might be $1,800/month. Your share was 11%. The employer was covering the rest.

On COBRA, you pay all of it, plus 2%. That $200 line item becomes $1,836.

This is not COBRA overcharging. It is the actual cost of your health coverage — a cost that was always there, just hidden by employer contributions.

Typical COBRA Premium Ranges (2026)

Individual, family, and mid-range estimates based on nationwide employer plan averages. Your specific premium may be higher or lower depending on your plan design and carrier.

• Individual (employee only): typically $650 – $900/month
• Employee + spouse: typically $1,300 – $1,900/month
• Employee + children: typically $1,200 – $1,700/month
• Family (employee + spouse + children): typically $1,800 – $2,600/month

High-deductible plans sit at the lower end. PPO plans with rich benefits sit at the higher end. Plans from large employers with negotiated rates may be lower than the average.

Your specific premium is printed in your COBRA Election Notice. Check the notice rather than guessing.

What's Actually Included in the Monthly Number

Your COBRA premium covers exactly what your employer plan covered — no more, no less. Check your notice for which of these are bundled into your monthly premium:

• Medical coverage — almost always included
• Prescription drug coverage — usually included with medical
• Dental coverage — often separate from medical in the premium breakdown
• Vision coverage — often separate
• Health FSA balance — special rules apply; some plans allow continuation access

You can often elect just medical without dental or vision if they were bundled separately. Your notice will show you the elections you can make and the premium for each combination.

When the First Payment Is Due

Here's the math most people get wrong. Your COBRA coverage doesn't start when you elect — it starts retroactively to the day after your employer coverage ended. So if your employer coverage ended May 31 and you elect on July 10, you owe:

• June premium (retroactive)
• July premium
• Possibly August premium if payments are due in advance

That's two or three months of premium at election — a significant upfront cost if you waited to elect. After the initial payment, subsequent premiums are typically due monthly, often with a 30-day grace period.

Your notice specifies the exact payment schedule, payment method, and where to send checks.

Cost-Lowering Options Worth Knowing

A few real cost-reduction paths people often miss:

• Elect partial coverage. If you don't need dental or vision right now, elect only medical.
• Severance-subsidized COBRA. Some severance packages include employer-paid COBRA premiums for a period (1-6 months is common). If yours doesn't, this is often worth negotiating.
• Use COBRA as a bridge. If you expect new employer coverage within a month or two, paying just that bridge amount may be cheaper than the administrative hassle of a marketplace plan.
• Compare to a marketplace plan with subsidies. If your household income has dropped meaningfully, a Silver plan on healthcare.gov with the Advanced Premium Tax Credit may cost less than COBRA for comparable coverage.

What the Premium Doesn't Cover

The monthly premium is just the cost of having the insurance. You still pay your normal plan cost-sharing when you actually use medical care:

• Deductibles (your deductible generally continues from where it was — it doesn't reset when you switch to COBRA)
• Copays and coinsurance
• Out-of-network charges
• Anything the plan doesn't cover

Good news: because COBRA is the same plan you had, your deductible progress usually carries over. If you were close to hitting your out-of-pocket maximum before the qualifying event, you still are on COBRA.

The Bottom Line

• COBRA costs up to 102% of the full group premium — your old share plus the employer's share plus a 2% admin fee
• Individual plans typically run $650-$900/month; family plans $1,800-$2,600
• Your exact premium is printed in your notice
• First payment at election can include multiple months if you elected after the coverage-end date
• You can elect partial coverage to lower the monthly number
• If your income has dropped, a marketplace plan with subsidies may cost less for equivalent coverage

COBRA isn't a rip-off. It's a mirror — it shows you what your employer was quietly paying for your health insurance the whole time. Whether it's the right choice now depends on what you'd be getting for the same money elsewhere.