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COBRA Health Insurance: How to Keep Your Job-Based Coverage After Leaving a Job

COBRA lets you keep your old employer's health plan for a while after you leave a job, but it works β€” and costs β€” differently than most people expect.

COBRA lets you temporarily keep your exact same plan

COBRA (the Consolidated Omnibus Budget Reconciliation Act) is a federal law that lets eligible employees and their covered family members continue the same employer-sponsored health plan for a limited time after a 'qualifying event,' like losing or leaving a job.

Job loss is the most common qualifying event, but not the only one

Losing coverage due to termination (other than for gross misconduct) or a reduction in hours is the most common trigger, but divorce, a covered employee's death, or a dependent child aging off the plan can also qualify a family member for COBRA.

Coverage typically lasts 18 or 36 months

Job loss or reduced hours generally qualifies you for up to 18 months of COBRA coverage, while some other qualifying events, like divorce or the covered employee's death, can extend eligibility up to 36 months for affected dependents.

It generally only applies to employers with 20 or more employees

Federal COBRA typically covers private-sector employers with 20 or more employees. Many states have their own 'mini-COBRA' laws extending similar continuation rights to employees of smaller companies, with their own separate rules.

You have 60 days to decide

After receiving your COBRA election notice, you generally have 60 days to decide whether to elect coverage. You don't have to decide immediately, and if you do elect it, coverage can apply retroactively back to the day your job-based coverage ended.

You pay the full premium, plus an admin fee

While employed, your employer typically covers a significant share of your premium. Under COBRA, you generally pay the entire premium yourself β€” both your old share and the employer's former share β€” plus an administrative fee of up to 2% on top, which is why COBRA premiums often come as a surprise.

It isn't automatic β€” you have to actively elect it

Losing job-based coverage doesn't put you on COBRA automatically. Your former employer or its plan administrator is required to send you an election notice, and you have to actively choose and pay for coverage within the deadline for it to take effect.

It's usually worth comparing against other options

Losing job-based coverage is itself a 'qualifying life event' that opens a special enrollment window for ACA marketplace plans, which may end up cheaper than COBRA, especially if you qualify for premium subsidies based on your income. Medicaid eligibility is also worth checking if your income has dropped.

The first premium has its own deadline

Electing COBRA and paying for COBRA are two separate steps. According to Department of Labor guidance, a person generally has 45 days after electing to make the first premium payment. Because coverage can be retroactive to the date the old coverage ended, that first payment usually covers the whole gap, and missing it means the coverage is lost. After the first payment, monthly premiums normally come with a grace period of 30 days.

A disability can extend coverage to 29 months

If the Social Security Administration determines that a qualified person was disabled during the first 60 days of COBRA coverage, the person and their covered family members can generally extend coverage from 18 to 29 months. During the extra 11 months the plan may charge up to 150 percent of the group rate instead of 102 percent, which is a significant increase.

A second qualifying event can extend the clock

A family member who is already on COBRA after the employee loses a job can sometimes gain more time if a second qualifying event occurs, for example a divorce or the death of the employee. In that case the total maximum coverage period for the affected dependents is generally 36 months counted from the first event.

Medicare enrollment has its own trap

People who are eligible for Medicare should be especially careful. COBRA is generally not treated as the kind of current employer coverage that allows you to delay Medicare Part B without a penalty, and the special enrollment period for Part B based on employment is limited. Anyone near age 65 should talk to Medicare or a licensed counselor before choosing COBRA over enrolling in Medicare.

Why COBRA exists

Before COBRA became law in 1985, losing a job could mean losing health coverage overnight, with no bridge to a new plan. COBRA doesn't make coverage cheaper β€” it just guarantees the legal right to keep your existing plan temporarily, which matters most for people mid-treatment who don't want to switch doctors or plans abruptly.

COBRA is rarely the cheapest option, but it has one advantage

Because COBRA keeps you on the exact same plan, with the same doctors, network, and deductible you already had, it can be worth the higher cost for people mid-treatment or who have already met a plan-year deductible. For everyone else, it's worth pricing out ACA marketplace plans before defaulting to COBRA.

A simple cost comparison with made-up numbers

Suppose an employer's plan costs 700 dollars a month for one person, of which the employee paid 150 dollars a month through payroll and the employer paid the remaining 550 dollars. After leaving the job, COBRA allows the plan to charge up to 102 percent of the full cost, or about 714 dollars a month. That is nearly five times what the employee paid before, which is why COBRA often feels shocking. Over a six-month bridge, the difference is a few thousand dollars. A marketplace plan, especially one with income-based subsidies, might cost far less, but it could also have a different doctor network and a fresh deductible. The numbers here are illustrative only. Your actual premium appears in the election notice, and marketplace prices can be checked on HealthCare.gov or your state's exchange.

When COBRA is worth paying for

COBRA makes the most sense in a few situations: you are partway through a course of treatment with doctors who might not be in a new plan's network; you have already paid a large share of this year's deductible and out-of-pocket maximum, which would otherwise reset on a new plan; you expect to be covered by a new employer's plan within a month or two and just need a short bridge; or you are in a state or income range where marketplace plans would not be much cheaper. Because the election window is long, some people wait to see whether they will need care and then elect COBRA retroactively if they do. This approach has risks, since the first premium must be paid on time and it is not a way to avoid paying for coverage you never use.

A short checklist for the first weeks after leaving a job

Ask HR how and when you will receive the election notice, and keep your mailing address current. Write down the election and payment deadlines the notice gives you. Price at least one marketplace plan and check whether your income qualifies for a subsidy or for Medicaid. Check whether your current doctors and prescriptions are covered by each option. Ask the plan administrator if dental, vision, and flexible spending accounts are separate choices. Keep proof of every payment. This article is general information about US federal rules, not legal or insurance advice, and state laws and plan documents can change the details, so confirm the facts with the plan administrator, the Department of Labor, or a licensed professional.

Frequently Asked Questions

Can I switch from COBRA to a marketplace plan later if I change my mind?

Generally yes, but timing matters β€” losing job-based coverage opens a marketplace special enrollment window that is time-limited, and electing COBRA doesn't necessarily reopen or extend that window indefinitely, so it's worth researching both options early rather than defaulting to COBRA and deciding later.

Does COBRA cover dental and vision too?

If your employer's dental or vision coverage was part of the same group health plan you're continuing, it can generally be continued under COBRA as well, often as a separate election from medical coverage.

What if I get a new job with health benefits while on COBRA?

COBRA coverage generally ends once you become covered under another group health plan, though there can be a brief overlap period; check your specific plan's rules on the exact cutoff.

Is there a way to get COBRA at a discounted rate?

Occasionally, Congress has passed temporary COBRA premium subsidies during specific economic circumstances, but there is no standing federal subsidy for COBRA premiums in general β€” always check current federal and state programs rather than assuming a discount applies.

How long do I have to elect COBRA?

Generally 60 days, counted from the later of the date coverage would end or the date of the election notice. After you elect, you generally have 45 more days to make the first premium payment. Check the dates in the notice itself, because they are the ones your plan will use.

What happens if I miss a monthly COBRA payment?

Plans must usually allow a grace period of 30 days after the due date. If the payment is not received by the end of that grace period, coverage can be terminated and generally cannot be reinstated, so it is worth setting up reminders or automatic payments.

Does COBRA ever end earlier than 18 months?

Yes. It can end sooner if you stop paying the premium, if you become covered under another group health plan, if you become entitled to Medicare after electing COBRA, or if the employer ends its group health plans.