Losing your job is stressful enough without worrying about losing your health insurance too. That's where COBRA comes in. Named after the Consolidated Omnibus Budget Reconciliation Act, COBRA gives you the right to keep your employer-sponsored health coverage for a limited time after certain life events. But here's what most people don't realize: COBRA can be expensive, and it's not always your best option. Let's break down everything you need to know about how COBRA works, what it costs, and whether it's right for you.
What Is COBRA Insurance?
COBRA is essentially a continuation of your workplace health insurance. When you were employed, your company probably paid a large chunk of your health insurance premium—maybe 60%, 70%, or even more. You paid the rest through paycheck deductions. With COBRA, you keep the exact same health plan, with the same doctors, hospitals, and prescription drug coverage. The catch? You now pay the entire premium yourself, plus an administrative fee of up to 2%.
This federal law applies to private-sector employers and state and local government employers with 20 or more employees. If you worked for a smaller company, you won't have access to COBRA, but your state might have a similar continuation coverage law with different rules.
Who Qualifies for COBRA?
Not every job loss or life change triggers COBRA eligibility. The law defines specific "qualifying events" that give you the right to continue coverage. For employees, the two main qualifying events are job termination (for any reason except gross misconduct) and reduction in work hours that causes you to lose coverage. If you were laid off, fired for performance issues, or had your hours cut from full-time to part-time, you likely qualify.
Your family members can also qualify for COBRA, sometimes for even longer periods. Spouses and dependent children become eligible if the covered employee dies, gets divorced or legally separated, becomes entitled to Medicare, or loses their job. Additionally, a child who loses dependent status under the health plan—like turning 26 and aging off a parent's plan—can elect their own COBRA coverage.
The timeline matters here. Your employer must notify the plan administrator within 30 days of certain qualifying events. For divorce, legal separation, or loss of dependent status, you or your family member need to notify the plan administrator within 60 days. After that, the plan has 14 days to send you an election notice explaining your rights.
How Much Does COBRA Cost?
Here's where COBRA gets expensive. In 2025, average monthly COBRA premiums range from $400 to $3,000 depending on whether you're covering just yourself or your entire family, and whether you have a basic plan or comprehensive coverage. That's because you're paying both your old employee contribution and the portion your employer used to cover.
For perspective, if your employer was paying 75% of a $1,200 monthly premium and you were paying $300 through payroll deductions, your COBRA bill would jump to about $1,224 per month (that's the full $1,200 plus the 2% administrative fee). That sticker shock catches a lot of people off guard, especially when they're between jobs and watching their budget carefully.
If you're receiving Social Security disability benefits, there's one more wrinkle: during the 11-month disability extension period, the premium can increase to 150% of the regular cost. That means if your normal COBRA premium is $600 monthly, it could jump to $900 during months 19-29 of your coverage.
How Long Does COBRA Last?
The duration of your COBRA coverage depends on what caused you to lose your health insurance. If you lost coverage due to job termination or reduced hours, you get 18 months of continuation coverage. For most other qualifying events—like divorce, death of the covered employee, Medicare eligibility, or a child losing dependent status—coverage extends to 36 months.
That 18-month period can stretch to 29 months if you or a family member qualifies as disabled according to the Social Security Administration. And if a second qualifying event happens during your initial COBRA period—say you lose your job and then get divorced six months later—your coverage can extend to the full 36 months.
How to Enroll in COBRA
After a qualifying event, your employer's health plan must send you an election notice explaining your COBRA rights. You then have 60 days to decide whether to elect coverage. Don't panic if you don't enroll immediately—once you elect within that 60-day window and make your first payment within 45 days of electing, your coverage is retroactive to the date you lost your original coverage.
This retroactive feature is actually pretty valuable. It means you can wait to see if you need medical care before committing to those expensive premiums. If you break your arm three weeks after losing coverage, you can elect COBRA, pay the premiums, and have that emergency room visit covered. If you land a new job with benefits before the 60 days are up, you can skip COBRA altogether and avoid those premiums entirely.
COBRA Alternatives Worth Considering
Before you commit to expensive COBRA premiums, explore these alternatives. The Health Insurance Marketplace often offers more affordable coverage, with about 80% of enrollees qualifying for federal subsidies that reduce monthly premiums. In 2025, the average Marketplace plan costs around $477 per month before subsidies—potentially hundreds less than COBRA. Job loss counts as a qualifying life event, giving you 60 days to enroll outside the normal open enrollment period.
If your income has dropped significantly, check whether you qualify for Medicaid. Unlike Marketplace plans, Medicaid has no enrollment deadline—you can apply any time. Coverage is low-cost or free for those who qualify. If you're married, getting on your spouse's employer plan is another smart option, again using job loss as the special enrollment trigger.
Short-term health insurance is cheaper—sometimes as low as $80 monthly—but comes with serious limitations. These plans typically don't cover pre-existing conditions, offer fewer benefits, and aren't considered minimum essential coverage under the ACA. They can work as a stopgap if you're young, healthy, and just need catastrophic coverage while job hunting, but they're not a long-term solution.
Making Your Decision
COBRA makes sense in specific situations: when you're mid-treatment with doctors in your plan's network, when you've already met your deductible for the year and want to maximize that benefit, or when you expect to land a new job with benefits within a few months. It's also valuable if you have complex medical needs and switching plans would disrupt your care.
For everyone else, shopping the Marketplace should be your first move. Visit Healthcare.gov, enter your income information, and see what subsidies you qualify for. Compare those monthly premiums to your COBRA costs. Check whether your doctors are in-network with Marketplace plans. The few hours you spend researching could save you thousands of dollars.
Losing your health coverage doesn't mean you're out of options. Whether you choose COBRA or an alternative, the key is understanding your rights and acting within those 60-day deadlines. Take the time to compare your options, run the numbers, and pick the coverage that protects both your health and your wallet during this transition.
