How COBRA Health Insurance Works When You Leave a Job

What COBRA is and when you can use it

COBRA is a federal law that lets you keep your employer's health insurance for a limited time after you leave a job, get laid off, or lose coverage for certain other reasons. You pay the full premium yourself — what your employer was paying plus what you were paying — plus a small administrative fee. COBRA is not free, and it is not permanent, but it bridges the gap between jobs or until you find another plan.

You can use COBRA only if your former employer had at least 20 employees and offered health insurance. If you worked for a small business, COBRA does not apply, and you will need to look at the individual market or other options instead. If your employer did offer a plan, COBRA typically lasts 18 months from the date you lost coverage, though it can extend to 29 months in some situations.

Key Takeaways

• COBRA lets you keep your old employer plan for up to 18 months, but you pay the full premium plus 2 percent, which is usually $400 to $800 per month for individual coverage.
• You must notify your employer's benefits administrator within 60 days of losing coverage, or you lose the right to COBRA entirely.
• COBRA is most useful as a short-term bridge if you are between jobs or waiting for a new employer's plan to start, not as a long-term solution.
• If COBRA costs too much, the individual market, Medicaid, or a spouse's plan may be cheaper and worth exploring at the same time.
• Your former employer must send you a notice explaining COBRA rights within 14 days of your coverage ending; if you do not receive it, contact the benefits department directly.

What COBRA actually costs

The premium you pay under COBRA is the full cost of the plan — both the part your employer was paying and the part you were already paying — plus 2 percent to cover administrative costs. For individual coverage, this often runs $400 to $800 per month depending on the plan and your location. For family coverage, it can easily exceed $1,500 per month. These are real numbers from real plans, not estimates.

You also have to pay any deductibles, copays, and coinsurance the same way you did as an employee. COBRA does not change the plan's cost-sharing structure; it only lets you keep the same insurance. Some people find that the individual market, especially if they may have access to for tax credits, costs less than COBRA. Others find that a spouse's employer plan or Medicaid is cheaper. It is worth comparing before you commit.

COBRA premiums are usually due monthly, and you typically have 30 to 45 days to pay after receiving an invoice. If you miss a payment, your coverage ends immediately and you cannot get it back. Some people set up automatic payments to avoid this trap.

How to notify your employer and enroll

Your employer's benefits administrator or HR department must send you a formal notice of your COBRA rights within 14 days of the date your coverage ends. This notice will explain the deadline to enroll, the cost, and how to submit your election. Read it carefully, because the deadline is usually 60 days from the date you lost coverage, and missing it means you lose COBRA entirely.

To enroll, you typically fill out an election form and return it to the benefits administrator or the plan's COBRA administrator — the notice will tell you where. You may also need to provide proof of the may have access to event (the job loss, layoff, or other reason your coverage ended). Once you enroll, coverage usually starts on the first day of the month after your old coverage ended, though some plans backdate it to the day after coverage stopped.

If you do not receive a COBRA notice within 14 days, contact your former employer's HR or benefits department directly and ask for it. Do not wait — the 60-day clock starts from the date your coverage ended, not from the date you receive the notice.

When COBRA ends and what happens next

COBRA coverage lasts 18 months from the date your employment ended, unless you or a family member had a may have access to event during that time. If you become disabled while on COBRA, the coverage extends to 29 months. If a family member dies or gets married, that person's coverage may end earlier. Your COBRA administrator will tell you the exact end date when you enroll.

About 30 to 60 days before COBRA ends, your plan will send you a notice explaining what happens next and what other coverage options are available. At that point, you will need to move to another plan — the individual market, a new employer's plan, Medicaid, or Medicare if you are 65. There is no automatic extension, and there is no grace period. Coverage stops on the date COBRA ends.

Some people use COBRA as a bridge while they job-hunt, knowing it will end in 18 months. Others use it for a few months and then switch to a cheaper individual plan once they find one. The key is to plan ahead so you are not uninsured when COBRA runs out.

COBRA versus the individual market and other options

COBRA is not always the cheapest option. On the individual market, you may find plans that cost less, especially if you earn below a certain income and may have access to for tax credits that lower the monthly premium. You can compare plans and see your costs at Healthcare.gov (or your state's marketplace if you live in a state that runs its own exchange). The comparison takes about 15 minutes and shows you real prices.

Medicaid is free or very low-cost if you meet income limits, which vary by state. If you lost your job and your income dropped, you may now may have access to for Medicaid even if you did not before. You can check at your state's Medicaid office or through Healthcare.gov.

If you have a spouse with employer coverage, adding yourself to their plan may be cheaper than COBRA, though you will have to wait for their open enrollment period unless you have a may have access to event (like losing your job). If you are under 26, you may be able to stay on a parent's plan instead.

The best approach is to compare COBRA cost, individual market cost (with any tax credits you may have access to for), Medicaid, and a spouse's plan side by side before you decide. COBRA is often the most expensive option, but it may be worth it if you have ongoing medical care or prescriptions and want to avoid switching providers mid-treatment.

What to do if you miss the COBRA deadline

If you miss the 60-day deadline to enroll in COBRA, you lose the right to it permanently. You cannot go back and enroll later. At that point, your options are the individual market, Medicaid, or a spouse's plan if you have one. Some people in this situation have a may have access to life event (like getting married or having a child) that opens a special enrollment period on the individual market, which lets you enroll outside the normal open enrollment season.

If you believe you missed the deadline through no fault of your own — for example, your employer never sent the notice — contact your state's insurance commissioner's office or your state's health department. Some states have rules that extend the deadline in cases of employer error, though this is not may provide.

COBRA and pre-existing conditions

COBRA cannot deny you coverage or charge you more because of a pre-existing condition. The plan you had as an employee is the plan you get under COBRA, with the same coverage and the same cost-sharing. This is true regardless of your health history.

If you are worried about losing coverage because of a health condition, COBRA can be a useful bridge while you find another plan. However, the individual market also cannot deny coverage or charge more for pre-existing conditions, so you have options beyond COBRA.

Frequently Asked Questions

Can I enroll in COBRA if I was fired?

Yes. COBRA applies to most job separations, including being fired, laid off, or quitting. The exception is if you were fired for gross misconduct, which is defined narrowly and rarely used. If you are unsure, ask your former employer's benefits administrator whether your separation qualifies.

What if I cannot afford the COBRA premium?

Compare the individual market (at Healthcare.gov) and Medicaid in your state. Both may be cheaper than COBRA. If your income dropped when you lost your job, you may now may have access to for Medicaid or for tax credits that lower individual market premiums. You can also ask your COBRA administrator about payment plans, though not all plans offer them.

Does COBRA cover dental and vision?

Only if your employer's plan included dental and vision coverage. COBRA continues the same coverage you had as an employee, no more and no less. Check your old plan documents or call the COBRA administrator to confirm what is included.

Can I switch COBRA plans if I do not like mine?

No. You must take the same plan you had as an employee. You cannot switch to a different plan option within COBRA. If you want a different plan, you have to leave COBRA and enroll in the individual market or another option, though you will lose the right to return to COBRA.

What happens to my dependents when COBRA ends?

Their coverage ends on the same date yours does unless they have a separate may have access to event. Spouses and children need their own plan after COBRA ends. They can enroll in the individual market, Medicaid, or another employer plan if one is available. Start looking at options 30 to 60 days before COBRA ends so there is no gap.