COBRA Health Insurance Explained: How It Works, Who Qualifies, and What to Expect

Losing job-based health coverage can feel overwhelming. COBRA health insurance is a law that gives many people the option to keep their employer’s health plan temporarily after certain life events—often when they need it most.

This guide breaks down what COBRA is, how it works, what it costs, and how to decide if it might be right for you.

What Is COBRA Health Insurance?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law in the United States.

In simple terms, COBRA continuation coverage lets you:

• Stay on your employer’s health plan for a limited time after you would normally lose it
• Keep the same doctors, networks, and benefits you had through your job
• Pay the full cost of the premium yourself (plus a small administrative fee)

COBRA is not a separate type of insurance company or plan. It’s a rule that allows you to temporarily continue the same group health insurance you had through your employer.

Who Is Eligible for COBRA?

Not everyone and every employer is covered by COBRA, but many are.

Which employers must offer COBRA?

In general, COBRA applies to:

• Private-sector employers with 20 or more employees on more than half of typical business days in the previous year
• Most state and local government employers

Very small employers may not be required to offer COBRA under federal law, though some states have “mini-COBRA” rules that cover smaller employers.

Which plans are covered?

COBRA usually applies to group health plans that provide medical care, such as:

• Employer-sponsored medical insurance
• Sometimes dental and vision plans (if they’re part of the group health plan)
• Certain health reimbursement arrangements (HRAs)

It does not apply to some types of coverage like life insurance or disability benefits.

Who can get COBRA coverage?

People who may qualify are called qualified beneficiaries, typically:

• Employees who were covered under the plan
• Spouses of covered employees
• Former spouses after divorce or legal separation
• Dependent children who were covered under the plan

Each person can decide to elect COBRA individually. For example, a spouse might choose COBRA even if the former employee does not.

What Events Make You Eligible for COBRA?

COBRA kicks in when a qualifying event causes you to lose your employer health coverage.

Common qualifying events

For an employee, qualifying events often include:

• Voluntary job loss (you quit)
• Involuntary job loss (you’re laid off or terminated), other than for gross misconduct
• Reduction in work hours that makes you ineligible for the employer plan

For a spouse or dependent child, qualifying events can also include:

• Divorce or legal separation from the covered employee
• Death of the covered employee
• A dependent child aging out of eligibility under the plan rules
• The covered employee becoming eligible for Medicare, in some circumstances

When one of these events happens and you lose coverage, you may be offered COBRA.

How Long Does COBRA Coverage Last?

COBRA is temporary, not permanent.

The length of coverage generally depends on the qualifying event:

In some limited cases, coverage might be extended (for example, if another qualifying event happens during COBRA, or if someone is determined disabled during a certain timeframe), but these situations have specific rules and deadlines.

What Does COBRA Cover?

One of COBRA’s biggest advantages is that it lets you keep the same coverage you had through your employer.

That usually means:

• Same plan (HMO, PPO, etc.)
• Same provider network
• Same covered benefits (such as office visits, hospital care, prescriptions, and preventive services, according to your plan’s rules)
• Same deductibles, copays, and coinsurance

COBRA does not change what your plan covers—it only changes who pays for it.

If your former employer changes or ends the group health plan for everyone, your COBRA coverage will typically change or end as well.

How Much Does COBRA Health Insurance Cost?

This is where many people feel the biggest shock.

While you’re employed, your employer often pays a significant share of the monthly premium, and you pay the rest. Under COBRA, you often have to pay:

• 100% of the premium (your share + your employer’s former share)
• Plus up to 2% in administrative fees

So your monthly cost may be much higher than what you were used to paying from your paycheck.

Why do people still choose COBRA if it’s expensive?

Despite the cost, people commonly choose COBRA when they:

• Want to keep the same doctors and network
• Are in the middle of ongoing treatment (such as pregnancy, surgery follow-up, or managing a chronic condition)
• Have already met part or all of their deductible for the year
• Need a short-term bridge between jobs or coverage options

It can help maintain continuity of care, which many people find valuable during transitions.

How to Enroll in COBRA Step by Step

If you experience a qualifying event, there is a specific process and timeline.

1. Wait for a COBRA election notice

• After a qualifying event and loss of coverage, your plan administrator usually sends a COBRA election notice.
• This explains your rights, costs, coverage options, and deadlines.

2. Know your election window

You generally have at least 60 days to decide whether to enroll in COBRA, starting from the later of:

• The date your coverage would otherwise end, or
• The date you receive the COBRA election notice

If you miss this window, you usually lose your right to COBRA.

3. Decide who will enroll

Each qualified beneficiary can choose COBRA independently:

• The former employee
• Spouse or former spouse
• Dependent children

One person may enroll while another declines.

4. Submit your election and make your first payment

• You must formally elect COBRA (often by completing a form or online election).
• You will have a limited time to make your first premium payment after electing.
• COBRA coverage is generally retroactive to the date your prior coverage ended, as long as you elect it and pay on time.

When Does COBRA Coverage End?

COBRA doesn’t last forever. It can end when:

• You reach the end of the allowed COBRA period (e.g., 18 or 36 months)
• You do not pay premiums on time
• Your former employer stops offering any group health plan
• You enroll in other group coverage (like a new employer plan) that does not impose certain limits
• You enroll in Medicare after electing COBRA (for at least some COBRA beneficiaries, depending on the situation)

When COBRA ends, you may have other options, such as enrolling in an individual plan or a new job-based plan, if available.

COBRA vs. Other Health Insurance Options

COBRA is just one way to get health coverage after leaving a job. It often makes sense to compare it to other paths.

Common alternatives to COBRA

• New employer coverage (through a new job, if available)
• Individual health insurance plans (purchased directly or through a marketplace)
• Coverage through a spouse’s or partner’s employer
• Government programs (if you qualify based on income, age, or disability)

Each option has its own costs, provider networks, and rules.

Quick comparison snapshot

People often weigh:

• Short-term needs (upcoming treatments, current doctors)
• Budget (monthly premium plus out-of-pocket costs)
• How long they need coverage before something else begins

Key Advantages of COBRA

COBRA continuation coverage can offer several benefits:

• Continuity of care: Keep seeing the same doctors and specialists, under the same plan rules
• No new waiting periods for preexisting conditions under the same plan rules
• Predictability: You already know how the plan works, including copays and deductibles
• Short-term bridge: Helps cover gaps between jobs, during job searches, or while awaiting other coverage

For many people going through major life changes, this sense of stability is especially valuable.

Important Limitations and Considerations

COBRA can be helpful, but it comes with important trade-offs:

• Cost: Paying the full premium plus fees can be challenging, especially without a paycheck from that employer
• Time limit: Coverage eventually ends, so it’s not a permanent solution
• No upgrades: You usually must keep the same plan the employer offers, not design your own
• Plan changes outside your control: If the employer changes or cancels the group plan for everyone, your COBRA is affected too

Because of this, many people treat COBRA as temporary, using it while they explore longer-term options.

Practical Tips When Considering COBRA

Here are some simple steps many consumers find useful when deciding what to do:

1. Review your COBRA notice carefully

   • Note the monthly cost, coverage details, and election deadlines.

2. Check where you are in your deductible and out-of-pocket costs

   • If you’ve already met a large part of your deductible or out-of-pocket maximum, staying on the same plan could reduce your total costs for the rest of the year.

3. List current and upcoming health needs

   • Ongoing treatments, prescriptions, or planned surgeries may be easier to manage if you maintain consistent coverage and providers.

4. Compare alternatives

   • Look at the total cost, not just the monthly premium:
     • Deductibles
     • Copays and coinsurance
     • Out-of-network charges
     • Access to your current doctors

5. Watch the calendar ⏰

   • The election and payment deadlines for COBRA and other coverage options are strict. Missing them may affect your choices.

Frequently Asked Questions About COBRA

Is COBRA health insurance mandatory for me?

No. COBRA is a right, not a requirement. You can choose to accept or decline it. Each eligible family member can make their own decision.

Can I switch to another plan after starting COBRA?

In many situations, yes. If you later become eligible for another plan (such as a new job or a spouse’s plan), you can usually switch during that plan’s enrollment period or when you qualify for a special enrollment period. Once you enroll in another group plan, COBRA may end.

Does COBRA affect whether I can get other coverage later?

COBRA is generally treated like other group health coverage. Ending COBRA (by using up the time or losing it for nonpayment) can often trigger a special enrollment period for certain individual or marketplace plans, but timing and rules matter.

The Bottom Line: What COBRA Health Insurance Really Is

COBRA health insurance is a federal continuation right that allows many people to keep their employer-based health coverage for a limited time after a job loss, reduction in hours, or certain family changes.

• It offers stability and continuity of care during major transitions.
• It typically comes with higher monthly premiums, because you pay the full cost yourself.
• It is temporary, giving you time to reassess your situation and plan your next coverage step.

Understanding how COBRA works—who qualifies, what it costs, and how it compares to other options—can help you make a decision that fits both your health needs and your budget during a time of change.