Understanding COBRA continuation coverage
COBRA lets you keep your employer health plan after leaving a job — for a price. Who qualifies, what it costs, and the alternatives to consider.
COBRA is a federal law that lets you keep your employer's group health plan for up to 18 months (sometimes 36) after you would otherwise lose coverage — for example, after a layoff, voluntary resignation, or reduction in hours. The catch: you pay the full premium plus a 2% administrative fee, which is often eye-wateringly expensive.
Who qualifies
- Employees and their dependents enrolled in an employer health plan with 20+ employees on most business days.
- Triggered by: termination (other than for gross misconduct), reduction in hours, divorce, death of the employee, or a dependent aging out at 26.
- Smaller employers may offer mini-COBRA under state law — coverage duration and rules vary.
What it actually costs
When you were employed, your employer paid 70–80% of the premium. Under COBRA, you pay 100% plus a 2% admin fee. For a family plan, expect $1,800–$2,800 per month. Use this number to compare against marketplace plans before deciding.
How long it lasts
- 18 months — Standard period after termination or reduction in hours.
- 29 months — If you become disabled within 60 days of the COBRA start date.
- 36 months — For dependents after the death of the employee, divorce, or aging out.
How to enroll
- Watch for your election notice
Your employer or COBRA administrator must mail an election notice within 44 days of your qualifying event. It explains your options, premiums, and deadlines.
- Decide within 60 days
You have 60 days from the later of the notice date or coverage end to elect COBRA. The clock is firm.
- Compare alternatives before electing
Marketplace coverage with ACA subsidies, a spouse's employer plan, or Medicaid (if income-eligible) are often cheaper. Loss of coverage is itself a QLE for special enrollment.
- Pay retroactively if needed
You can elect COBRA up to 60 days after losing coverage and pay retroactive premiums — useful if you had a medical event during the gap. The coverage is treated as continuous.
FAQ
- Can I keep dental and vision through COBRA?
Yes — COBRA applies to any group health benefit you had, including dental, vision, and Healthcare FSAs. You can elect them individually.
- What happens to my Healthcare FSA under COBRA?
Limited COBRA rights apply: you can typically continue contributing post-tax through the end of the plan year if you have a positive balance. Rarely worth the cost.
- Can my new employer reject me because I had a gap?
No. The ACA eliminated pre-existing condition exclusions, so a gap in coverage doesn't affect your eligibility or what's covered at your next employer.