COBRA Insurance Explained: Coverage, Cost, and Cheaper Alternatives (2026)

Losing job-based health insurance is stressful, and COBRA offers a familiar lifeline — keep the exact plan you already had. The catch is the price: most people are shocked when they see the full premium. Knowing the federal rules and your alternatives helps you make the right call before any deadline passes.

Quick Answer

COBRA lets you continue your employer's group health plan for up to 18 months (sometimes 36) after a qualifying event — but you pay up to 102% of the plan's full premium, which is usually far more than you paid as an employee. Losing job-based coverage also opens a 60-day Special Enrollment Period on the ACA marketplace, where income-based subsidies often make a comparable plan cheaper. Compare both before your COBRA election deadline.

What COBRA is and who is eligible

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families the right to temporarily keep the group health coverage they would otherwise lose. Federal COBRA generally applies to private-sector employers with 20 or more employees, as well as state and local governments, according to the U.S. Department of Labor. Many states have "mini-COBRA" laws that extend similar rights to smaller employers, so it is worth asking your plan administrator even if your company is small.

To have COBRA rights, three things must be true: your group plan is covered by COBRA, you experienced a qualifying event, and you are a qualified beneficiary (a covered employee, spouse, former spouse, or dependent child enrolled the day before the event). One detail people miss: COBRA continues the same plan you had, so it follows the same rules on networks, prior authorization, and what services are covered. If you are weighing options, it helps to understand what health insurance covers in general before assuming COBRA is identical to a new plan.

Qualifying events and how long coverage lasts

The qualifying event determines both who keeps coverage and how long. Job loss and reduced hours give 18 months; the more disruptive family events give up to 36 months. The table below summarizes the federal maximums.

Qualifying event	Who is covered	Maximum duration
Employee's job loss (not gross misconduct)	Employee, spouse, dependents	18 months
Reduction in hours below the eligibility threshold	Employee, spouse, dependents	18 months
Divorce or legal separation	Spouse, dependents	36 months
Death of the covered employee	Spouse, dependents	36 months
Dependent child ages off the plan	That child	36 months
Covered employee becomes entitled to Medicare	Spouse, dependents	36 months

Two extensions can lengthen the 18-month period. If the Social Security Administration determines that a qualified beneficiary is disabled within the first 60 days of COBRA coverage, the whole family can get an 11-month extension, for a total of 29 months — though the plan may charge up to 150% of the premium during those extra months. A second qualifying event (for example, the employee dies during an 18-month period) can extend a beneficiary's coverage to 36 months. These rules come straight from the DOL's Worker's Guide to COBRA.

Why COBRA is so expensive

Here is the sticker shock. While you were employed, your employer almost certainly paid the largest share of your premium and you paid the rest through payroll deductions. Under COBRA, you can be charged up to 102% of the plan's total cost — your old share plus the employer's share plus a 2% administrative fee, per the Department of Labor.

A simple illustration of how the math changes (your real numbers will differ):

Total monthly premium for your plan: $700 (employer paid $550, you paid $150)
Your COBRA premium: $700 + 2% = $714/month

The dollar amount you pay can therefore jump several times over even though the coverage is identical. There is no federal cap on the figure — it is simply your plan's full premium plus 2%. During an 11-month disability extension, the cap rises to 150% of the plan cost. If your plan is a high-deductible plan paired with an HSA versus an FSA, remember that staying on the same plan preserves the deductible you have already met this year, which can be a hidden reason COBRA pays off mid-year.

The COBRA timeline: notices, election, and payment

COBRA runs on strict deadlines, and missing one can cost you coverage permanently. Here is the federal sequence:

Employer notifies the plan: Generally within 30 days of a job loss, death, or reduction in hours.
You notify the plan: For divorce, legal separation, or a child aging off, you must tell the plan administrator, usually within 60 days of the event.
Plan sends the election notice: Within 14 days of being notified of the qualifying event.
Your election period: You have at least 60 days — counted from the later of the election-notice date or the date you would lose coverage — to choose COBRA.
First premium payment: Due within 45 days of electing COBRA. Missing this can forfeit all COBRA rights.
Monthly grace period: Plans must allow a 30-day grace period for each ongoing payment.

One feature of the 60-day election window is that COBRA is retroactive. If you elect within the window, coverage reaches back to the day you lost your job-based plan, so a claim that occurs during the decision period is covered once you elect and pay. These timeline rules are detailed in the DOL's COBRA FAQs for workers.

COBRA vs. the ACA marketplace: a cost-comparison framework

Losing job-based coverage is itself a qualifying life event for the ACA marketplace. That triggers a 60-day Special Enrollment Period (SEP), during which you can buy an individual plan and, crucially, may qualify for income-based premium tax credits that lower your monthly cost, per HealthCare.gov. Because you typically pay COBRA's full premium with no subsidy, the marketplace is often cheaper for someone whose income just dropped. You can read more in our guides to the ACA marketplace and the special enrollment period.

Use this framework to compare honestly:

Get your exact COBRA premium from the election notice — the real number, not an estimate.
Run the marketplace numbers at HealthCare.gov (or your state exchange) using your expected income for the year, which determines your subsidy.
Compare total cost, not just premiums. Line up the deductible, the out-of-pocket maximum, and whether your doctors are in network on each option.
Check Medicaid. If your income is now low, you or your children may qualify for free or low-cost coverage. See Medicaid eligibility.
Weigh continuity. If you are mid-treatment, COBRA keeps your exact network and your year-to-date deductible — sometimes worth the premium.

Choose COBRA when you are in active treatment, you have already met a large deductible this year, your income is too high for meaningful subsidies, or you expect new employer coverage within a month or two. Choose the marketplace when your income has dropped enough to earn subsidies, you can switch providers, or a marketplace plan simply costs less after the tax credit. If you are heading toward self-employment, our guide to health insurance for the self-employed covers the longer-term options.

Common COBRA mistakes that cost people coverage or money

Letting the 60-day election clock run out. The window is generous but firm. If you miss it, you generally lose COBRA — and if you also miss the 60-day marketplace SEP, you may have to wait for Open Enrollment.
Paying COBRA without comparing. Many people auto-elect COBRA and never check the marketplace, where a subsidized plan can cost far less.
Forgetting that COBRA is retroactive. You can use the decision window to shop, knowing a mid-window claim is still covered if you elect and pay.
Electing COBRA, then trying to switch mid-month. Once you drop COBRA voluntarily, you usually can't jump to the marketplace until Open Enrollment unless you have another qualifying event — so decide before you elect.
Overlooking state mini-COBRA. If your old employer had fewer than 20 employees, federal COBRA may not apply, but your state's law might. Ask the plan administrator.
Missing the first-payment deadline. Electing COBRA is not enough; you must pay within 45 days or lose the coverage entirely.

If you are choosing a replacement plan rather than COBRA, our walkthrough on how to choose health insurance can help you weigh premiums against deductibles and networks.

Frequently asked questions

How much does COBRA insurance cost? Under federal law, your COBRA premium can be up to 102% of the plan's full cost — the share you paid as an active employee plus the share your employer used to pay, plus a 2% administrative fee. Because employers typically cover most of the premium for active workers, COBRA often costs several times what you paid before. There is no national cap on the dollar amount; it equals your old plan's full premium plus 2%.

How long can you stay on COBRA? COBRA lasts up to 18 months when you lose coverage because of job loss or reduced hours. For other qualifying events — divorce or legal separation, the covered employee's death, or a child aging off the plan — qualified beneficiaries can get up to 36 months. A disability determination can extend the 18-month period by 11 months, to a total of 29 months.

Is COBRA better than marketplace insurance? It depends on your income and health needs. COBRA keeps your exact plan, doctors, and deductible progress, which matters if you're mid-treatment. But losing job-based coverage opens a 60-day Special Enrollment Period on the ACA marketplace, where income-based premium tax credits often make a comparable plan much cheaper. Compare both before the COBRA election deadline passes.

Sources & further reading

U.S. Department of Labor — Continuation of Health Coverage (COBRA)
U.S. Department of Labor — A Worker's Guide to Health Benefits Under COBRA
U.S. Department of Labor — FAQs on COBRA Continuation Health Coverage for Workers (PDF)
HealthCare.gov — See Your Options If You Lose Job-Based Health Insurance
HealthCare.gov — COBRA Coverage and Marketplace Options

This article is general information, not legal, tax, or insurance advice. COBRA rules, deadlines, and amounts can change and may differ under your specific plan or your state's mini-COBRA law. Verify your rights and exact figures with DOL.gov, HealthCare.gov, or your plan administrator before making a decision.