COBRA
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) applies to employers with 20 or more employees. When you experience a qualifying event (job loss, reduction in hours, divorce, or aging off a parent's plan), COBRA gives you the right to keep your existing coverage temporarily. The cost is the full premium (your former share plus the employer's share) plus a 2% administrative fee. Duration is 18 months for employee events and 36 months for dependent events (such as divorce or a child aging out). Many states have "mini-COBRA" laws that extend similar protections to employees of smaller firms. You have 60 days from the qualifying event to elect COBRA and 45 days after election to make the first payment.
Example
An employee paying $200/month for family coverage leaves their job. The employer was contributing $1,800/month. COBRA cost: ($200 + $1,800) times 1.02 = $2,040/month. This is a 10x increase over what the employee was paying, though it maintains the same plan, network, and benefits.
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Employee Salary Equivalent
An employee salary that matches your contractor income is typically 25-40% lower than your contractor gross, because the employer covers half of FICA taxes, provides benefits, and gives paid time off that you currently fund yourself.
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