The Short Answer
COBRA is a federal law that lets you keep your employer-sponsored health insurance for a limited time after you leave a job, lose hours, or experience certain life events. The catch: you pay the full premium — what you used to pay plus what your employer was covering — plus a small administrative fee.
For many people, that adds up to a significant monthly bill. But for someone between jobs or waiting for new coverage to kick in, COBRA can be a critical safety net.
What Does COBRA Stand For?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act — a 1985 federal law that created the continuation coverage requirement. The name comes from the larger budget bill it was part of, not from anything related to health insurance itself.
Who Is Eligible for COBRA?
COBRA applies to most employer-sponsored group health plans at companies with 20 or more employees. You may be eligible if you experience a “qualifying event,” including:
- Voluntarily quitting a job
- Being laid off or fired (unless for gross misconduct)
- Having your hours reduced below the threshold for benefits
- Divorce or legal separation from a covered employee
- A dependent child aging off the plan (usually at 26)
- The covered employee becoming eligible for Medicare
- Death of the covered employee
If you lose coverage due to one of these events, you and your covered dependents are generally entitled to elect COBRA continuation coverage.
How Much Does COBRA Cost?
This is the biggest surprise for most people. When you were employed, your employer likely paid a large share of your health insurance premium — often 70–80% of it. Under COBRA, you pay the entire amount yourself, plus an administrative fee of up to 2%.
Example: If your monthly health insurance premium was $600 total and you paid $120 per month, your employer was covering $480. Under COBRA, you’d pay the full $600 — plus up to $12 in administrative fees — for a total of up to $612 per month.
For family coverage, the costs are higher. Average family COBRA premiums can run $1,700–$2,200 per month or more depending on the plan.
How Long Does COBRA Last?
The standard COBRA continuation period is 18 months for most qualifying events (like job loss or reduced hours). It can extend to 36 months in certain situations, such as divorce or a dependent aging off the plan.
There are also disability extensions that can push the period to 29 months if the Social Security Administration determines you were disabled at the time of the qualifying event.
How Do You Enroll in COBRA?
After a qualifying event, your employer’s plan administrator must send you a COBRA election notice. You generally have 60 days from the date of the notice (or the date coverage was lost, whichever is later) to decide whether to elect COBRA.
If you elect COBRA, coverage is retroactive — meaning even if you waited 59 days to sign up, your coverage would be continuous from the date you lost it. This matters if you have medical expenses during that gap.
Once enrolled, your first premium payment covers the retroactive period, which can be a large lump sum if you waited.
Is COBRA Worth It?
It depends on your situation. COBRA makes sense if:
- You have ongoing medical care, prescriptions, or upcoming procedures that would be expensive to restart under a new plan
- You’re only between jobs for a short time and expect new employer coverage soon
- The alternative coverage options cost more or have worse networks
COBRA may not be the best option if:
- You qualify for Medicaid (income-based, often free)
- You can get a marketplace plan with a subsidy that costs less
- You’re generally healthy and a short-term or high-deductible plan would suffice
Losing job-based coverage counts as a qualifying life event for the ACA marketplace, giving you a 60-day special enrollment window to shop for a subsidized plan as an alternative to COBRA.
The Bottom Line
COBRA keeps your existing health insurance running after you leave a job, but you pay the full cost. Before automatically enrolling, compare the COBRA premium against marketplace plans — you may find comparable or better coverage at a lower price, especially if your income qualifies you for a subsidy.
Frequently Asked Questions
Can I be denied COBRA?
Generally no — if your employer has 20+ employees and you had a qualifying event, you have the right to elect COBRA. You can lose it if you fail to pay premiums on time or become covered under another group health plan.
What if my company has fewer than 20 employees?
Federal COBRA doesn’t apply, but many states have “mini-COBRA” laws that provide similar protections for smaller employers. Check your state’s insurance department for details.
Can I drop COBRA early?
Yes. You’re not locked in. If you find cheaper coverage — through a new job, the marketplace, or Medicaid — you can cancel COBRA at any time.
Does COBRA cover dental and vision?
If dental and vision were part of your employer’s group health plan, they may be covered under COBRA. Check your election notice to see which benefits are included.
What happens if I miss a COBRA payment?
You have a 30-day grace period after each monthly due date. Miss the grace period and your COBRA coverage is terminated — and you generally cannot reinstate it.
Is COBRA premium tax deductible?
COBRA premiums may be deductible as a medical expense on your federal taxes if you itemize and your total medical expenses exceed 7.5% of your adjusted gross income. Consult a tax professional for your specific situation.
This article is for educational purposes only and does not constitute health insurance or legal advice. Coverage rules and costs vary — verify details with your employer, insurer, or HealthCare.gov.