COBRA is simultaneously the most useful and most expensive health insurance option most Americans will ever encounter. When you lose job-based coverage, a COBRA election notice arrives — giving you 60 days to decide whether to continue your existing coverage. Here's what you need to know before that deadline.
What Is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that lets employees and their families continue group health insurance coverage for a limited time after certain events — most commonly job loss.
The key distinction: under COBRA, you're keeping the exact same plan you had at work. The quality doesn't change. But you now pay 100% of the premium (both your share and your employer's share) plus up to 2% administrative fee.
What's in the COBRA Notice?
Your COBRA election notice must include:
- The qualifying event that triggered COBRA eligibility (termination, reduction in hours, divorce from covered employee, etc.)
- Your coverage options — which plans you can elect
- The monthly premium you'd pay for each option
- The election deadline — 60 days from the later of: the date of the event, or the date of the notice
- Duration of coverage available (typically 18 or 36 months)
- How to pay — the administrator's contact information and payment process
Qualifying Events for COBRA
COBRA applies when group health insurance is lost due to:
- Voluntary or involuntary termination (including layoffs, but not gross misconduct)
- Reduction in hours that causes loss of benefits eligibility
- Employee death (for covered dependents)
- Divorce or legal separation from the covered employee
- A dependent child aging out of coverage (typically at 26)
- Employee becoming eligible for Medicare (for dependents who then lose coverage)
How Much Does COBRA Cost?
The sticker shock is real. Most employers pay 70–80% of health insurance premiums for employees. COBRA makes you pay all of it.
Example:
- Your employer's total plan cost: $700/month per employee
- You were paying: $140/month (20%)
- COBRA cost: $714/month ($700 + 2% admin fee)
This can be $500–$1,500+/month for family coverage.
Should You Elect COBRA?
It depends on your situation:
COBRA makes sense when:
- You have ongoing medical needs, existing prescriptions, or scheduled procedures — COBRA is retroactive (you can elect after incurring expenses, within the 60-day window)
- Your current providers are in-network on your current plan but may not be on alternatives
- You expect to get new employer coverage within a few months
- ACA marketplace options in your area have limited networks or high out-of-pocket costs
Consider alternatives when:
- You're generally healthy and the cost difference is significant
- You qualify for Medicaid (losing job-based coverage is a qualifying life event)
- You have access to a spouse's employer plan (also a qualifying life event)
- ACA marketplace plans in your area are cheaper with similar coverage
COBRA vs. ACA Marketplace
Losing job-based coverage triggers a Special Enrollment Period (60 days) for ACA marketplace plans. This lets you compare:
- COBRA: Same plan, often much more expensive, immediate continuity
- Marketplace plan: New plan with income-based subsidies (if you qualify), potentially much cheaper
Key: If your projected income for the year will be under 400% of the federal poverty level, marketplace subsidies may make a comparable plan far cheaper than COBRA.
The 60-Day Retroactive Window
COBRA has a powerful feature most people don't know: if you elect COBRA within 60 days, your coverage is retroactive to the date of the qualifying event. This means:
- You can wait to see if you incur major medical expenses
- If you don't, you pay nothing (just don't elect)
- If you do, you can elect COBRA retroactively and your claims will be covered
- You'll owe back premiums for the months of retroactive coverage
This strategy carries risk (you're effectively uninsured in the interim), but for healthy individuals, it can make financial sense.
What Happens If You Don't Elect COBRA?
You simply lose your employer-based coverage at the end of the month your qualifying event occurred (or sometimes the date itself). You have no COBRA rights after the 60-day election window closes.
Duration of COBRA Coverage
Standard COBRA lasts 18 months for job loss or reduction in hours. It can extend to:
- 29 months if you're disabled at the time of the qualifying event
- 36 months for qualifying events like divorce, death, or dependent aging out
Got a COBRA notice and need to understand your options? Upload it to PaperLens and get a plain-English breakdown of your costs, deadlines, and whether it's worth electing. Scan your notice →