Losing your job is stressful enough without worrying about losing your health insurance too. That's where COBRA comes in—the federal law that lets you keep your employer's health plan for a while after you leave. But here's what catches most people off guard: you'll be paying the full freight, often $600 to $800 per month for individual coverage or well over $1,800 for a family. Before you reflexively sign up for COBRA, it's worth understanding how it works, what it costs, and whether marketplace alternatives might save you serious money.
What Is COBRA and Who Qualifies?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act—a mouthful that basically means you can temporarily continue your employer-sponsored health insurance after certain life events. The law applies to companies with 20 or more employees, and it kicks in when you experience what's called a "qualifying event."
Common qualifying events include losing your job (whether you quit, got laid off, or were fired for reasons other than gross misconduct), having your work hours reduced so you no longer qualify for benefits, divorce or legal separation from a covered employee, or the death of the covered employee. Your dependent children can also qualify if they age out of your plan.
Once a qualifying event occurs, your employer and plan administrator have 44 days to send you a COBRA election notice. Then the clock starts ticking: you have 60 days from when you receive that notice (or from when your coverage would end, whichever is later) to decide whether to enroll. If you elect COBRA and pay your first premium within 45 days of enrolling, your coverage is retroactive to your last day of regular coverage—meaning any medical bills you racked up during that gap period can be covered.
The Real Cost of COBRA Coverage in 2026
Here's the part that shocks people: COBRA premiums are usually 102% of the total cost of your health plan. That "102%" includes what you were paying, what your employer was paying, plus a 2% administrative fee. While you were employed, your employer likely covered 70-80% of your premium. Under COBRA, you pay it all.
In 2025-2026, individuals can expect to pay between $600 and $800 per month for basic coverage, though some plans run $400-$700 depending on the region and plan type. Family coverage typically ranges from $1,800 to $2,000 monthly, with some comprehensive employer plans exceeding $3,000 or even $4,000. Regional differences matter too—states like Texas and New Mexico tend to have slightly lower premiums than California or New York due to insurance market variations.
That's a lot of money when you've just lost your income. Which is exactly why comparing COBRA to ACA Marketplace plans is so important—especially if you qualify for subsidies.
How Long Does COBRA Last?
The standard COBRA coverage period is 18 months if you lost your job or had your hours reduced. But depending on your situation, you might qualify for extended coverage up to 36 months. If the qualifying event is divorce, legal separation, the death of the covered employee, or the employee becoming eligible for Medicare, spouses and dependent children get 36 months of coverage.
There are also extension opportunities. If you're determined to be disabled under Social Security within the first 60 days of COBRA coverage, you and your family members can extend coverage from 18 months to 29 months. You'll need to notify the plan administrator within 60 days of the disability determination. Additionally, if a second qualifying event occurs during your initial 18-month period—like a divorce or a dependent aging out—coverage can extend to 36 months for affected family members.
One special rule to know: if the covered employee became eligible for Medicare less than 18 months before losing their job, the spouse and dependents can get COBRA for up to 36 months from the date the employee became Medicare-eligible.
COBRA vs. ACA Marketplace Plans: Which Saves You More?
This is where things get interesting. Job loss triggers a Special Enrollment Period for the ACA Marketplace, meaning you can sign up for a subsidized plan outside the normal open enrollment window. And those subsidies can make a dramatic difference. While COBRA might cost you $600-$800 for individual coverage, a comparable ACA plan often runs $400-$500 before subsidies—and with subsidies, many people pay less than $50 per month.
The ACA provides Premium Tax Credits that cap your insurance costs at a percentage of your income—currently around 8.5% for many income levels. If you're unemployed or earning significantly less than before, you could qualify for substantial subsidies. Some estimates show ACA Marketplace plans costing 30-50% less than COBRA when subsidies apply. Keep in mind that enhanced subsidies that have been in effect are set to expire in late 2025, which could increase costs for some enrollees, particularly those earning above 400% of the federal poverty level.
So when does COBRA make sense despite the cost? If you're in the middle of treatment with specialists who aren't in Marketplace plan networks, COBRA lets you keep those doctors without interruption. If you've already met most or all of your annual deductible and have ongoing medical expenses, staying on your employer plan through COBRA means you won't have to start over with a new deductible. And if you know you're only going to be between jobs for a few weeks or a couple of months, COBRA can serve as a simple bridge until your new employer's benefits kick in.
But for most people who've lost their jobs and are facing reduced income, the ACA Marketplace offers more affordable long-term coverage. You'll want to compare both options carefully, looking at premiums, deductibles, out-of-pocket maximums, and whether your preferred doctors are in-network.
How to Enroll in COBRA and What Happens Next
When you receive your COBRA election notice in the mail, read it carefully. It will outline your coverage options, monthly costs, and enrollment deadlines. You'll typically have the option to enroll by completing and mailing back a paper form or by registering online using an account number or Social Security number provided in the notice.
Remember: you have 60 days to decide, but you must pay your first premium within 45 days of electing coverage. If you miss the 60-day enrollment window, you lose your right to COBRA—there are no extensions. However, because coverage is retroactive once you enroll and pay, you have a bit of breathing room to shop around and compare your options without going uninsured.
Once enrolled, you'll pay monthly premiums directly to your former employer's plan or the COBRA administrator. Your coverage, benefits, and provider network remain exactly the same as when you were employed—only the billing changes. You can typically keep COBRA until your coverage period ends, you get a new job with health benefits, you become eligible for Medicare, or you stop paying premiums.
Making the Right Choice for Your Situation
Choosing between COBRA and a Marketplace plan isn't one-size-fits-all. Run the numbers for your specific situation. Visit Healthcare.gov to see what subsidized Marketplace plans cost based on your projected income for 2026. Compare premiums, deductibles, and networks. Consider how long you expect to be without employer coverage and whether you're in the middle of medical treatment.
The peace of mind that comes with continuous, familiar coverage can be worth paying extra for COBRA if you're between jobs temporarily. But if you're facing an extended period without employment or starting a business, the long-term affordability of a subsidized Marketplace plan might be the smarter financial move. Either way, don't let the 60-day deadline sneak up on you—losing that window means losing your COBRA rights entirely, and you'll be left scrambling for alternatives.
