COBRA lets eligible people temporarily keep the employer group health coverage they would otherwise lose after certain qualifying events. Its main advantage is continuity: you can often keep the same plan, doctors and accumulated plan-year spending. Its main drawback is cost: you may have to pay up to 102% of the plan’s total premium. Compare that cost and coverage with another group plan, Marketplace coverage, Medicaid or CHIP before the relevant enrollment deadlines pass.
How does COBRA health insurance work?
COBRA—the Consolidated Omnibus Budget Reconciliation Act—is a federal law requiring certain group health plans to offer temporary continuation coverage when a qualifying event would otherwise cause a loss of coverage. It continues an existing employer plan; it does not create a new one.
Federal COBRA generally applies to private-sector employer group health plans that had at least 20 employees on more than half of their typical business days in the prior calendar year. Part-time employees count fractionally. It also generally applies to state and local government plans. Federal COBRA generally does not cover federal government plans, churches or certain church-related organizations. State continuation laws, sometimes called mini-COBRA, may cover some smaller insured plans; check your state insurance regulator and the type of plan you have.
A qualifying event must actually cause coverage to end. Leaving a job by itself does not always create a COBRA right.
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Common qualifying events
- Termination or reduced work hours: The employee and covered family members may qualify, except when termination is for gross misconduct.
- Death of the covered employee: A spouse and dependent children may qualify.
- Divorce or legal separation: A spouse and dependent children may qualify if the event causes them to lose coverage.
- The employee becomes entitled to Medicare: This can create continuation rights for a spouse and dependent children in some circumstances.
- A dependent child stops meeting the plan’s dependent-child rules: The child may qualify for continuation coverage.
Do you have 60 days to sign up for COBRA?
Generally, a qualified beneficiary must have at least 60 days to elect COBRA, measured from the later of the date coverage ends or the date the election notice is provided. Follow the dates and payment instructions in your own election notice, which explains how the deadline applies to your case.
If you elect COBRA and pay the required premiums, coverage is retroactive to the date your prior coverage ended. That can prevent a gap, but it may mean the first bill covers multiple months. Weigh the cost of that retroactive premium against the risk and cost of being uninsured while you decide.
How much does COBRA cost?
The plan can generally charge up to 102% of the total cost of coverage, including the portion your employer previously paid and a 2% administrative charge. An employer may subsidize some or all of the premium, but is not required to. Check whether any subsidy applies, how much it covers and when it ends. There is no single national COBRA price: the premium depends on the plan and coverage tier.
For a qualifying disability extension, the maximum charge may rise to 150% during the extended months while the disabled beneficiary remains covered. The plan documents and election notice are the right places to check your premium and any applicable extension rules.
How long can you stay on COBRA?
The maximum period depends on the qualifying event and the beneficiary. Eighteen months is common when coverage is lost because of employment termination or reduced hours. Certain events can allow up to 36 months for a spouse or dependent, and a qualifying disability extension or second qualifying event can extend some coverage periods to a maximum of 29 or 36 months, depending on the circumstances.
These are maximum periods, not guarantees that coverage will continue for that long in every case. Your election notice and plan documents should identify the applicable duration and any steps or deadlines for requesting an extension.
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What are the pros and cons of COBRA?
| Factor | Potential advantage | Potential drawback |
|---|---|---|
| Plan continuity | You can generally continue the existing group plan, including its applicable benefits, deductibles, copays, coverage limits and claim procedures. | You pay the plan’s continuation premium, which may be substantially more than the payroll contribution you paid while employed. |
| Doctors and prescriptions | Keeping the plan may help you retain access to covered doctors, hospitals and prescriptions. | Confirm that your providers and medications remain covered; the plan can change for COBRA participants when it changes for active participants. |
| Plan-year spending | Staying in the plan may preserve the relevance of deductible and out-of-pocket spending already accrued during that plan year. | A new plan may have different deductibles, limits or cost-sharing, so compare your remaining exposure rather than looking only at the monthly premium. |
| Time to decide | The election period can give you time to compare choices, and an election with required payment makes coverage retroactive to the loss date. | Electing later can mean a larger initial bill because premiums may be due for earlier months. |
| Duration | Continuation can provide a bridge while you seek other coverage. | It is temporary, and the available period depends on the event and beneficiary. |
What alternatives should you compare?
There is no universally cheapest or best option. The answer depends on your location, household, income, providers, care needs and plan documents. Get the COBRA premium and plan information, then compare the actual alternatives on the same terms.
- Another group plan: A spouse’s, parent’s or dependent’s employer plan may allow special enrollment after job-based coverage is lost. The Department of Labor describes a generally 30-day window; verify the receiving plan’s notice requirements and effective date.
- Health Insurance Marketplace: Losing job-based coverage generally gives you a 60-day Marketplace selection period. Depending on household circumstances, you may qualify for premium tax credits or cost-sharing reductions. Electing COBRA does not necessarily prevent later Marketplace enrollment if a new qualifying special-enrollment opportunity arises.
- Medicaid: You can enroll at any time if eligible. Eligibility depends on state rules and household circumstances.
- CHIP: Eligible children may be able to enroll in the Children’s Health Insurance Program year-round.
Use a side-by-side comparison
- Compare the monthly premium, including any COBRA subsidy and how long it lasts.
- Compare deductibles and out-of-pocket limits, and check how much spending has already accrued in the current plan year.
- Check whether your current doctors, hospitals and prescriptions are covered under each option.
- Write down each option’s start date and enrollment deadline so you can identify any gap.
- Check Marketplace financial assistance and household-specific Medicaid or CHIP eligibility before deciding based on premiums alone.
Is COBRA worth it after losing your job?
COBRA may be worth considering if keeping your existing coverage matters—for example, if you want continuity with your current providers or are in the middle of care—and the premium fits your budget. It may be less attractive if the full premium is unaffordable or another plan offers a better combination of cost, effective date and coverage.
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Make the decision using your own election notice, plan documents and alternative-plan details. In particular, compare the total cost you expect to pay, not just the premium: a lower-premium plan may have different deductibles, networks or prescription coverage, while staying in the existing plan may preserve continuity. Do not let the COBRA election deadline pass while assuming another option will automatically take effect; confirm each plan’s enrollment rules and start date.
Quick Recap
Official guidance
- U.S. Department of Labor: COBRA continuation coverage
- U.S. Department of Labor: Health coverage options after job loss
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