COBRA Coverage: Continuing Employer Health Insurance
A guide to COBRA continuation coverage after leaving a job, covering eligibility, enrollment deadlines, cost calculations, and alternatives to consider.
Verify your former employer has 20 or more employees
COBRA applies to private-sector employers with 20+ employees, as well as state and local governments. Employers with fewer than 20 workers are exempt from federal COBRA, but 40 states have mini-COBRA laws covering smaller employers with as few as 2 employees.
Confirm your qualifying event triggers COBRA rights
Qualifying events include voluntary or involuntary job loss (except for gross misconduct), reduction in hours, divorce or legal separation from the covered employee, death of the covered employee, or a dependent aging off the plan at 26.
Identify all family members eligible for COBRA
Covered dependents at the time of the qualifying event are each independently eligible. A spouse or child can elect COBRA even if the employee does not. Each family member can choose different coverage options if multiple plans were available.
Note your maximum coverage duration
Job loss or hours reduction allows 18 months of COBRA. Divorce, death, or Medicare entitlement allows 36 months for dependents. Disability during the first 60 days extends coverage to 29 months but the premium increases to 150% of the plan cost in months 19-29.
Understand COBRA Costs
Calculate your monthly COBRA premium
COBRA premiums are up to 102% of the total plan cost (employer plus employee share plus a 2% admin fee). If your employer paid $600 and you paid $200 monthly, COBRA will cost about $816. The average family COBRA premium is $2,100-$2,400 per month.
Compare COBRA costs to marketplace plan alternatives
Job loss qualifies you for a 60-day Special Enrollment Period on the marketplace. A Silver plan for an individual on the marketplace averages $400-$600 before subsidies. If your income dropped, subsidies could reduce this to $50-$200 per month.
Check if you qualify for a COBRA subsidy
Federal COBRA subsidies are not standard but have been enacted during economic downturns, such as the 100% subsidy under the American Rescue Plan in 2021. Check current legislation for any active subsidies. Some states offer their own COBRA premium assistance programs.
Factor in your current healthcare needs when comparing options
If you are mid-treatment, have met your deductible, or are in the third trimester of pregnancy, COBRA may save you thousands by keeping your current plan and providers. A fresh marketplace plan resets your deductible and may change your network.
Enrollment Timeline and Process
Watch for your COBRA election notice within 14 days of the event
Your employer has 30 days to notify the plan administrator, who then has 14 days to send you the election notice. If you do not receive it within 44 days, contact your former employer's HR department and the plan administrator directly.
Elect COBRA within your 60-day election period
You have 60 days from the later of: the date you would lose coverage, or the date you receive the election notice. COBRA is retroactive to the day after your employer coverage ended, meaning there is no gap even if you enroll on day 59.
Make your first premium payment within 45 days of electing
The first payment covers all months since your employer coverage ended. If 3 months have passed, you owe 3 months of premiums at once. After the initial payment, subsequent premiums have a 30-day grace period each month.
Keep copies of all COBRA correspondence and payment receipts
Payment disputes are the most common COBRA issue. Send payments by check with the payment coupon, and keep copies of cleared checks or money order receipts. If paying online, screenshot confirmation pages. Store everything for at least 3 years after COBRA ends.
Strategic Decisions
Decide whether to elect COBRA immediately or wait
You can wait up to 60 days to decide because COBRA is retroactive. If you stay healthy during those 60 days, you can skip COBRA and enroll in a marketplace plan instead. If you get sick or injured, elect COBRA retroactively and submit claims.
Check if your spouse's employer plan is an option
Your qualifying event may trigger a Special Enrollment Period on a spouse's employer plan. Joining a spouse's plan is often 50-70% cheaper than COBRA. Contact the spouse's HR department within 30 days of the qualifying event to enroll.
Evaluate short-term health insurance as a bridge
Short-term plans cost 30-50% less than COBRA but have limited coverage: no pre-existing conditions, no maternity, and no mental health. Maximum duration varies by state from 3 to 36 months. These plans do not count as minimum essential coverage under the ACA.
Managing Your COBRA Coverage
Set up automatic or recurring premium payments
Missing a COBRA payment by even 1 day after the 30-day grace period permanently terminates your coverage with no reinstatement. Set calendar alerts for 7 days and 3 days before each due date. Consider setting up bank bill pay with automatic recurring payments.
Continue using the same insurance card and member ID
Your plan benefits, network, deductible progress, and out-of-pocket maximum all carry over on COBRA. Some providers may not realize you are on COBRA initially. If a claim is denied, call the plan and confirm your COBRA enrollment is active in their system.
Plan your transition off COBRA before it expires
COBRA expiration is a qualifying life event for marketplace enrollment (60-day Special Enrollment Period). Start shopping for replacement coverage 60 days before COBRA ends. Do not wait until the last day since marketplace applications take 2-4 weeks to process.
Request a certificate of creditable coverage when COBRA ends
This document proves continuous coverage, which may be needed for future insurance enrollment. Your plan administrator must provide it within 24 months of coverage ending. Keep this certificate with your important records for at least 5 years.
Frequently Asked Questions
How much does COBRA coverage cost per month?
COBRA premiums are the full cost of the plan (the portion your employer was paying plus your portion) plus a 2% administrative fee. The average COBRA premium is $700-$800 per month for individual coverage and $2,000-$2,100 for family coverage. This is often 3-4 times more than what you were paying as an employee because your employer no longer subsidizes the premium.
How long can I stay on COBRA after leaving my job?
COBRA coverage lasts up to 18 months after a qualifying event like job loss or reduction in hours. It extends to 29 months if you become disabled within the first 60 days. Dependents who lose coverage due to divorce, death of the employee, or a child aging out can receive up to 36 months. Coverage ends immediately if you miss a premium payment after the 30-day grace period.
Is COBRA worth it or should I get marketplace insurance instead?
Compare both options side by side. A marketplace (ACA) plan may cost significantly less, especially if your income qualifies for subsidies (household income between 100-400% of the federal poverty level). COBRA keeps your same doctors and network, which matters mid-treatment. Job loss qualifies you for a 60-day Special Enrollment Period on the marketplace. Run the numbers at healthcare.gov before choosing.
What is the deadline to elect COBRA coverage?
You have 60 days from the date you receive your COBRA election notice (or 60 days from the date coverage would end, whichever is later) to elect coverage. If you elect, coverage is retroactive to the date it would have lapsed, meaning there is no gap. You then have 45 days after electing to pay the initial premium, which covers the entire retroactive period.
Can I use COBRA to bridge a gap between jobs?
Yes, and this is COBRAs most common use. If your new job starts within 2-3 months, you can elect COBRA, wait to see if you need medical care during the gap, and only pay premiums retroactively if you do. This strategy works because you have 60 days to elect and 45 days to pay. Once your new employer coverage begins, you can drop COBRA with no penalty.