What is COBRA Insurance
COBRA allows you to continue your employer-sponsored health insurance coverage after leaving a job, but you must pay the full premium — including what your employer used to pay — which can make it expensive.
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that gives employees and their dependents the right to continue group health insurance coverage for a limited period after losing employer-sponsored insurance due to certain qualifying events. COBRA lets you keep the exact same plan — same network, same deductible, same formulary — but at a significantly higher cost because you now pay the entire premium yourself, plus an administrative fee of up to 2%.
How Much COBRA Costs
While employed, your employer typically covers 70–85% of your health insurance premium. Under COBRA, you pay it all:
| Monthly Premium (Employer + Employee Share) | |
|---|---|
| Individual coverage | $600–$900/month (average) |
| Family coverage | $1,700–$2,200+/month (average) |
These are national averages — actual costs depend on your specific plan. The shock of seeing the true full cost of employer health insurance is often jarring when workers first receive their COBRA notice.
When COBRA Coverage Applies
COBRA applies to employers with 20 or more employees. Qualifying events include:
| Qualifying Event | Coverage Duration |
|---|---|
| Voluntary or involuntary job loss (not gross misconduct) | Up to 18 months |
| Reduction in hours below plan eligibility | Up to 18 months |
| Employer bankruptcy | Up to 18 months |
| Divorce or legal separation (for covered spouse) | Up to 36 months |
| Covered dependent child aging off plan | Up to 36 months |
| Employee death (for covered dependents) | Up to 36 months |
Smaller employers (under 20 employees) may fall under state continuation laws (sometimes called "mini-COBRA") with varying rules.
COBRA Timeline
- You have until 60 days from the qualifying event (or the date your COBRA notice was sent) to elect coverage.
- Coverage is retroactive to the date your employer coverage ended — if you elect within the 60-day window and have a medical event during that gap, claims will be covered once you make your first premium payment.
- Your first payment may be large — covering all months since your qualifying event.
COBRA vs. Marketplace Insurance
In many cases, a marketplace plan through Healthcare.gov is cheaper than COBRA — especially if you qualify for premium subsidies based on your projected annual income. After a job loss, your income may drop enough to make you eligible for substantial subsidies or even Medicaid. Learn more about marketplace insurance (ACA plans) and how to compare options. If you need temporary coverage during a transition, short-term health insurance is another option — though with significant coverage limitations.
| Option | Cost | Network | Coverage Quality |
|---|---|---|---|
| COBRA | Very high (full premium) | Same as employer plan | Identical to old plan |
| Marketplace plan | Variable; subsidies available | New network | Comparable |
| Medicaid | Free or very low | Medicaid network | Good if you qualify |
When COBRA Makes Sense
Despite the cost, COBRA can be the right choice if:
- You're mid-deductible year and have made substantial payments toward your deductible — switching plans resets it
- You have upcoming surgeries or procedures with in-network providers you've already coordinated
- You expect to get new employer coverage within a few months
- You (or a dependent) are in active treatment and don't want to risk disrupting care by switching networks
COBRA is rarely the best long-term option for cost, but it can be the right bridge for a finite period. Always compare it against marketplace alternatives immediately after a qualifying event.