COBRA
A federal law that lets you keep your employer-sponsored health coverage for a limited time after leaving a job — at your own expense.
Definition
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that requires most employers with 20+ employees to offer continued health insurance coverage to employees (and their dependents) who lose coverage due to certain qualifying events.
Qualifying events that trigger COBRA eligibility:
- Voluntary or involuntary job termination (except gross misconduct)
- Reduction in hours (below the threshold for benefits eligibility)
- Divorce or legal separation from a covered employee
- A dependent child aging off a parent's plan (typically at 26)
- Death of the covered employee
- Employee becoming eligible for Medicare
COBRA basics:
- You can continue the exact same employer plan you had
- You pay the full premium — your share plus what your employer was paying — plus up to 2% administrative fee
- COBRA coverage lasts 18 months for most qualifying events (up to 36 months for certain dependent events)
- You have 60 days to elect COBRA after receiving the notice
- You can elect COBRA retroactively — meaning you can wait to elect until you actually have a medical bill
The cost reality: When your employer pays 70–80% of the premium, COBRA can cost $500–$2,000/month for a family — significantly more than marketplace insurance for many households.
Examples
You leave your job in May. You were paying $200/month for health coverage; your employer was paying $600. COBRA costs you $816/month ($800 + 2% admin fee) for the same coverage.
You're between jobs and generally healthy. You elect COBRA but don't pay — using the 60-day window to compare marketplace options. A marketplace plan is cheaper, so you never activate COBRA.
You experience a health emergency two weeks after your job ends. You retroactively elect COBRA within the 60-day window, pay the back premiums, and your claim is covered.
Frequently asked questions
Is COBRA usually worth it?
It depends. COBRA makes sense if you have ongoing medical needs, pending procedures, or established specialists you can't lose access to. For healthy individuals, a marketplace plan (especially with an ACA subsidy) is often significantly cheaper. Always compare before electing.
How long do I have to decide on COBRA?
You have 60 days from the date of your qualifying event (or the date of your COBRA notice, whichever is later) to elect coverage. You can elect retroactively, so there's usually no rush — compare your options first.
Can I switch from COBRA to marketplace insurance?
Losing job-based insurance (including voluntarily not electing COBRA) triggers a Special Enrollment Period — giving you 60 days to enroll in marketplace coverage. However, once you elect COBRA, you can only switch to marketplace insurance during Open Enrollment or if you experience another qualifying life event.
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