1. What is COBRA Coverage?

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows employees to continue health insurance coverage after leaving employment, typically for up to 18 months. The former employee pays both the employee and employer portions of the premium plus a 2% administrative fee.

2. How Does the Calculator Work?

The calculator uses the COBRA cost equation:

Where:

• \( Monthly\_premium \) — Original monthly premium amount ($)
• \( Term \) — Coverage period in months (typically 18)
• \( Admin\_fee \) — Administrative fee multiplier (typically 1.02 for 2%)

Explanation: The equation calculates the total cost of maintaining coverage by multiplying the monthly premium by the coverage term and adding the administrative fee.

3. Importance of COBRA Cost Calculation

Details: Calculating total COBRA costs helps individuals budget for healthcare expenses during employment transitions and compare against alternative coverage options.

4. Using the Calculator

Tips: Enter your current monthly premium, the coverage term (typically 18 months), and the administrative fee (typically 1.02). All values must be valid (premium > 0, term > 0, fee ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: Why is there an 18-month limit for COBRA?
A: The 18-month period is set by federal law as the standard maximum duration for most qualifying events like job loss or reduced hours.

Q2: Can the admin fee be more than 2%?
A: No, federal law limits the administrative fee to 2% of the premium cost.

Q3: Are there alternatives to COBRA?
A: Yes, alternatives include Marketplace plans under the ACA, Medicaid (if eligible), or spouse's health plan if available.

Q4: When does COBRA coverage begin?
A: Coverage is retroactive to the date of the qualifying event if elected within the 60-day enrollment period.

Q5: Can COBRA be extended beyond 18 months?
A: In limited circumstances (like disability or second qualifying event), coverage may extend to 29 or 36 months.