cobra1Los­ing your job can result in los­ing more than income—you may also lose employ­er-spon­sored health cov­er­age. To help unem­ployed, unin­sured Amer­i­cans at risk for finan­cial ruin in the event of a med­ical emer­gency, Con­gress in 1985 enact­ed the Con­sol­i­dat­ed Omnibus Rec­on­cil­i­a­tion Act, also called COBRA. COBRA requires cer­tain employ­ers to allow for­mer employ­ees the oppor­tu­ni­ty to con­tin­ue health insur­ance cov­er­age on a tem­po­rary basis. If eli­gi­ble, you must pay the full cost of the insur­ance and an addi­tion­al admin­is­tra­tive fee each month.

Step 1

Read the COBRA elec­tion notice you receive from your for­mer employ­er. This notice con­tains infor­ma­tion nec­es­sary to cal­cu­late and pay COBRA insur­ance. COBRA reg­u­la­tions allow employ­ers to charge you up to 102 per­cent of the cost of cov­er­age. Cost of cov­er­age includes the amount you con­tribute, the cost to the employ­er and an addi­tion­al 2 per­cent as an admin­is­tra­tive fee. Look for this per­cent­age in the elec­tion notice.

Step 2

Cal­cu­late the total month­ly cost of your health cov­er­age. Locate the amount you con­tribute on your pay stub. Locate the amount your employ­er pays in the insur­ance enroll­ment paper­work or call the employ­er’s human resources depart­ment. Add the amount you con­tribute each month to the amount paid by your employer.

Mul­ti­ply the total month­ly cost by the per­cent­age you will pay. For exam­ple, assume the total month­ly cost of your insur­ance is $450 and you must pay 102 per­cent as a month­ly pre­mi­um. Mul­ti­ply $450 by 1.02 per­cent to arrive at a month­ly pre­mi­um of $459.

Things You’ll Need

Pay stub
Insur­ance enroll­ment paperwork
COBRA elec­tion notice

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