What Is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows you to temporarily continue your employer-sponsored health insurance after you lose your job, get your hours reduced, or experience other qualifying events. It applies to employers with 20 or more employees.
How Long Does COBRA Last?
In most cases, COBRA coverage lasts up to 18 months after a qualifying event. In certain circumstances — such as disability or a second qualifying event — coverage can be extended to 29 or 36 months.
How Much Does COBRA Cost?
Here's the catch: under COBRA, you pay the full premium — both your share and what your employer used to pay — plus a 2% administrative fee. This means COBRA can cost 3-4 times what you were paying as an employee. For a family plan, that can easily exceed $1,500-$2,000 per month.
COBRA vs. ACA Marketplace Plans
Losing your job qualifies you for a Special Enrollment Period on the ACA marketplace. Depending on your income, you may be eligible for premium tax credits that make marketplace plans much cheaper than COBRA. Always compare both options before deciding.
When COBRA Makes Sense
- You're in the middle of treatment and want to keep your current doctors
- You've already met your deductible for the year
- You expect to get new employer coverage within a few months
- You have a pre-existing condition and your current plan covers it well
Important Deadlines
You have 60 days from your qualifying event (or from the date you receive the COBRA election notice, whichever is later) to elect COBRA coverage. Coverage is retroactive to the date of the qualifying event, so there's no gap.