COBRA

Keeping your old plan after a job ends

COBRA, named for the federal law that created it, lets you and your family stay on your employer's group health plan after you leave a job, lose hours or experience certain other events. It applies to employers with 20 or more employees.

The coverage is identical to what you had: same insurer, same network, same deductible progress. The big change is cost. Your employer usually stops contributing, so you pay the entire premium plus up to a 2% administrative fee.

Key rules

• Length: usually up to 18 months. Some events, like divorce or a dependent aging off the plan, allow up to 36 months.
• Election window: you have 60 days after receiving your election notice to sign up.
• Retroactive coverage: if you elect within the window and pay, coverage is backdated to the day your job coverage ended.
• First payment: due within 45 days of electing.

Example

Nicole leaves her marketing job in May to launch her own agency. Her employer coverage ends May 31, and she receives a COBRA notice in early June.

She has two clocks running:

1. COBRA election: 60 days from the notice.
2. Marketplace special enrollment: 60 days from losing coverage on May 31.

Nicole is midway through treatment for a shoulder injury and has met most of her deductible. Keeping COBRA through December preserves her deductible progress and her physical therapist. In November, during open enrollment, she shops for a 2027 plan and switches January 1.

Her friend in a similar spot, with no ongoing care, skipped COBRA entirely and bought a private plan that cost far less than the full COBRA premium.

When COBRA makes sense

• You are mid-treatment or have already met a large part of the deductible.
• Your doctors are not in any affordable individual plan network.
• You will have new job coverage soon.

When to skip it

• The full premium is much higher than individual options.
• Your projected income qualifies for a Marketplace premium tax credit.
• You are healthy and a private plan offers a good network at a lower cost.

A timing trap

Dropping COBRA voluntarily mid-year does not trigger a special enrollment period. If you elect COBRA and then want to switch, you usually have to wait until open enrollment, unless COBRA runs out or another event occurs.

Marketplace vs private plans

Leaving a job opens a special enrollment period for Marketplace plans. Private underwritten plans can be applied for at any time if you are healthy. Compare both against COBRA before deciding.

Our guides on COBRA alternatives and self-employed health insurance vs COBRA dig into the comparison. To weigh COBRA against individual plans, request a quote.