COBRA Continuation Coverage
Plain English
COBRA lets you keep your former employer's health plan for a limited time after you lose your job, your hours are cut, or another qualifying event. You keep the same plan and doctors, but you usually pay the full premium your employer used to share, plus up to a 2% fee. It's often expensive.
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Definition
COBRA continuation coverage, under the federal Consolidated Omnibus Budget Reconciliation Act, lets workers and their families keep group health benefits for a limited time after events like job loss, reduced hours, death or divorce. It generally applies to employers with 20 or more employees, and the person may have to pay the entire premium, up to 102% of the plan's cost.
Why It Matters
COBRA protects continuity, which can matter mid-treatment, but at full price. Comparing it with a Marketplace plan, where savings depend on income, can save a lot. And the timing rules for switching are strict.
Real-World Example
Imagine an employee's plan costs $800 a month, and the employer paid $600 of it. After a layoff, COBRA could cost the former employee up to $816 a month: the full $800 plus a 2% administrative fee, instead of the $200 they used to pay.
Common Misconceptions
- COBRA is free or subsidized. You generally pay the full premium plus up to 2%.
- All employers must offer COBRA. It generally applies to employers with 20 or more employees; some states cover smaller ones.
- You can drop COBRA and join a Marketplace plan any time. Voluntarily dropping it doesn't open a Special Enrollment Period.
Key Takeaways
- The Department of Labor: you may be required to pay up to 102% of the cost to the plan.
- It generally applies to employers with 20 or more employees in the prior year.
- You can enroll in a Marketplace plan within 60 days of losing job-based coverage instead.
- When COBRA runs out, you have 60 days to enroll in a Marketplace plan.
Frequently Asked Questions
What is COBRA health insurance?
A federal law that lets you keep your former employer's group health plan for a limited time after job loss or another qualifying event.
How much does COBRA cost?
Generally the full premium, including the employer's share, plus up to a 2% fee: up to 102% of the plan's cost.
Is COBRA or a Marketplace plan cheaper?
Often the Marketplace, especially if your lower income qualifies you for savings. Compare both within 60 days of losing coverage.
State-specific note: Many states have their own continuation laws (sometimes called mini-COBRA) for employers too small for federal COBRA. Check your state insurance department.
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- dol.govContinuation of Health Coverage (COBRA) · U.S. Department of Labor
- healthcare.govCOBRA coverage when you're unemployed · HealthCare.gov (U.S. Centers for Medicare & Medicaid Services)
Educational information, not advice: This page is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers.