Health & Medicare
COBRA Insurance Cost Explained
The 102% rule is federal statute (29 U.S. Code Section 1162(3)), as reported by CobraInsurance.com.
The jump from your old paycheck deduction to your first COBRA bill is not a pricing quirk, it is exactly what federal law says COBRA is allowed to charge.
Data sourced from 29 U.S. Code Section 1162(3)
Why the price jump is so large, and where it actually comes from
While employed, you typically only see a small payroll-deducted share of your health insurance premium, your employer covers the rest, often the majority of the total cost, without it ever showing up on your pay stub.
COBRA removes that employer contribution entirely: you now pay the full premium, both your former share and your employer's former share combined, plus a 2% administrative fee on top, 1.02x the total premium.
This is exactly why the jump from a paycheck deduction to a COBRA bill can feel so dramatic, most of what changed is simply that a cost you never saw is now visible and yours to cover in full.
This is federal law, not a negotiable or estimated figure
The 102% rule is not an insurer's pricing choice or an industry estimate, it is federal statute, 29 U.S. Code Section 1162(3). COBRA premiums are legally capped at the full premium plus a 2% administrative fee, employers and insurers are not permitted to charge more than that ceiling, which also means you are protected from being charged an inflated rate beyond what the law allows.
To calculate your own specific COBRA cost from your actual payroll deduction and your employer's contribution, the COBRA insurance cost calculator runs the 102% rule directly against your own numbers.
How long the coverage actually lasts
COBRA continuation coverage lasts up to 18 months after a job loss or a reduction in hours, the two most common qualifying events. Certain other qualifying events, a divorce, the death of the covered employee, or a dependent aging out of eligibility, can extend a dependent's own coverage up to 36 months instead, a meaningfully longer window tied to a different category of life event.
Frequently asked questions
Why does COBRA cost so much more than what I paid as an employee?
Because you start paying the full premium, both your own former payroll deduction and the portion your employer used to cover, plus a 2% administrative fee on top, 1.02x the total premium in federal statute.
Most employees only see their own small payroll-deducted share while working, so losing the employer's contribution is the main reason the jump feels so large.
Is the 102% figure an estimate, or is it fixed by law?
It is fixed by federal law, 29 U.S. Code Section 1162(3), not an estimate or an insurer-specific policy. COBRA premiums are legally capped at the full premium plus a 2% administrative fee, insurers and employers cannot charge more than that ceiling.
How long can I actually stay on COBRA?
Up to 18 months after a job loss or reduction in hours, the most common qualifying events. Certain other qualifying events, divorce, the death of the covered employee, or a dependent losing eligibility, can extend a dependent's coverage up to 36 months instead.
What is a typical COBRA premium in dollar terms?
Market ranges commonly cited run from about $400 to $700 a month for individual coverage, and can exceed $1,500 a month for family coverage. Your own exact cost depends entirely on what your specific employer plan actually costs, since COBRA is calculated as a percentage of your own plan's real premium, not a flat national rate.