Losing a job is stressful enough without also losing health insurance. COBRA gives you a way to keep your current coverage -- but at a price most people don't anticipate. Understanding your options quickly is important: the enrollment window is strict and missing it can leave you uninsured.
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law requiring employers with 20 or more employees to offer continuation health coverage after certain qualifying events. The catch: you pay the full cost of coverage yourself -- the portion you paid plus the portion your employer covered -- plus up to a 2% administrative fee.
For most employees, this is a significant shock. If your employer covered 70% of your $600/month family premium, your COBRA premium is the full $600 plus 2% -- about $612/month -- compared to the $180/month you paid while employed.
Important: The average COBRA premium is $609/month for an individual and $1,694/month for a family. These are among the most expensive health insurance options available. Always compare against ACA Marketplace alternatives before electing COBRA.
COBRA is triggered by specific qualifying events. The coverage duration depends on which event applies:
| Qualifying Event | Who Can Elect COBRA | Max Duration |
|---|---|---|
| Job loss (voluntary or involuntary, not for gross misconduct) | Employee, spouse, dependents | 18 months |
| Reduction in work hours below coverage threshold | Employee, spouse, dependents | 18 months |
| Employee becomes eligible for Medicare | Spouse and dependents only | 36 months |
| Divorce or legal separation | Spouse and dependents only | 36 months |
| Employee death | Spouse and dependents only | 36 months |
| Dependent child loses dependent status (e.g., turns 26) | That dependent only | 36 months |
After a qualifying event, your employer has 30 days to notify the plan administrator, who then has 14 days to send you a COBRA election notice. From the date you receive the notice (or your coverage ends, whichever is later), you have 60 days to elect COBRA.
Critically: if you elect COBRA, coverage is retroactive to the day after your employer coverage ended. This means you can wait the full 60 days, see if you incur any medical expenses, and then elect COBRA retroactively to cover those expenses. If you stay healthy during the 60 days, you can skip COBRA and enroll in a Marketplace plan instead.
Note: The retroactive coverage feature is one of COBRA's most underutilized benefits. You don't have to decide immediately. Wait, assess your health needs, and elect within the 60-day window only if you need it. Just be aware you'll owe back premiums for the period you're retroactively covered.
This is the most important decision to make quickly. Losing job-based coverage is a qualifying life event that gives you 60 days to enroll in a Marketplace plan.
| Factor | COBRA | ACA Marketplace |
|---|---|---|
| Cost | Very high -- full employer + employee premium + 2% | Potentially low -- subsidies based on income |
| Same doctors/network | Yes -- identical to employer plan | Depends on plan chosen |
| Coverage start | Retroactive to day employer coverage ended | First of next month after enrollment |
| Subsidy eligible | No | Yes -- if income qualifies |
| Duration | Up to 18-36 months | Ongoing with annual renewal |
| Prescription continuity | Yes -- same formulary | May differ by plan |
Note: If you lose your job and your household income will be under 400% of the Federal Poverty Level ($62,600 for a single person in 2026), run a Marketplace quote immediately. Subsidies can reduce your premium to $0-$100/month for plans that would cost $400-$600/month without assistance.
Federal COBRA only applies to employers with 20 or more employees. Many states have "mini-COBRA" laws that extend similar protections to employees of smaller businesses. Coverage duration and rules vary by state. If your employer has fewer than 20 employees, check your state's insurance commissioner website for continuation coverage options.
COBRA ends when:
When COBRA ends, it's a qualifying life event that lets you enroll in a Marketplace plan. You have 60 days from the COBRA end date to enroll.
A 42-year-old with a spouse and one child is laid off from a job where the employer was contributing $1,100/month toward a $1,300/month family health plan (the employee had been paying $200/month). Here's how the two paths compare:
| COBRA | ACA Marketplace | |
|---|---|---|
| Monthly premium | $1,326 (full premium + 2% admin fee) | $680-$950 depending on plan and subsidy |
| Network and providers | Identical to prior employer plan | May require switching doctors |
| Deductible progress | Carries over -- no reset mid-year | Resets to $0 on a new plan |
| Enrollment complexity | Simple -- same plan, just paying full cost | Requires choosing a new plan and provider network |
If this family has already met a substantial portion of their deductible for the year and has ongoing treatment with specific specialists, COBRA's higher premium can still be the better financial choice because a Marketplace plan would reset their deductible progress to zero and might not include their current specialists. If it's early in the plan year and the family is generally healthy, the Marketplace premium savings -- potentially $375-$650 per month -- usually wins. This is exactly why the comparison needs to happen individually for each household rather than defaulting to either option automatically.
COBRA rights apply separately to each type of group coverage you had -- medical, dental, and vision are treated as distinct plans for COBRA purposes, each with its own election rights. If you want to continue dental and vision but switch to a Marketplace plan for medical, you can elect COBRA for just those specific benefits rather than continuing the full package. This is a detail many people miss on their COBRA election notice, since the paperwork typically presents all benefits bundled together rather than itemizing which ones can be elected independently -- worth a direct call to your former employer's HR department or COBRA administrator to confirm before assuming you have to accept or decline the entire package as a unit.
Working through COBRA and Marketplace options can feel overwhelming during an already stressful job transition, but the decision only needs to be made once per coverage gap, and getting quotes from both paths takes less than an hour.