COBRA is the federal continuation-coverage law that lets you keep the exact same health plan after a layoff — but you generally pay the entire premium yourself, plus a small administrative fee. Losing your job usually means losing your employer-subsidized health coverage at the end of the month (or the day, depending on your plan). The Department of Labor, which administers COBRA, describes it as continuation of group coverage at the group rate. For many people the price difference is significant, and the specifics depend on your plan and your situation.
What's the core trade-off?
The core trade-off is that COBRA keeps the exact plan you already have and hands you the entire price of it. While you were employed, your employer was likely paying 70–80% of the premium; on COBRA you generally pay 100% of that premium plus up to a 2% administrative charge — often $600–$2,000 per month for an individual, and more for family coverage. What the money buys is continuity: the same network, the same prescription coverage, and the same deductible progress you have already built up for the year. What you give up is the employer subsidy, which is usually the largest single line in the bill. The Department of Labor, which administers COBRA, describes the arrangement as continuation of group coverage at the group rate. Your actual figures depend on your plan, and these rules and figures can change.
Election window. Under COBRA, the Department of Labor says people are generally given 60 days from the loss of coverage (or the date they receive the COBRA election notice, whichever is later) to elect coverage, and that election generally applies retroactively. In practice this means many people use the window to wait and see whether they need it. These rules and figures can change, so it often helps to confirm the dates on your own notice.
When is COBRA worth it?
COBRA is generally worth it in a handful of specific situations rather than as a default choice. The clearest is continuity of care: many people elect it when they are mid-treatment, mid-prescription course, or mid-pregnancy, and changing plans would mean changing doctors or interrupting something already underway. The second is deductible progress — when a significant part of the year's deductible has already been met, switching plans resets that progress, and the reset can cost more than the higher premium saves. The third is a short gap: people who expect to be re-employed with new coverage within one to three months often treat COBRA as bridge coverage rather than as a plan for the year. The fourth is straight price comparison, which is rare but possible for very rich employer plans. The situations people most often describe:
- They're mid-treatment, mid-prescription course, or mid-pregnancy and continuity matters.
- They've already met a significant chunk of the deductible for the year, and switching plans would reset that progress.
- They expect to be re-employed with new coverage within 1–3 months.
- Their COBRA cost is comparable to or cheaper than marketplace alternatives (rare, but possible for very rich employer plans).
When is the ACA marketplace the better choice?
The marketplace is often the better choice when the COBRA premium is the main obstacle and no course of care is already in progress. Timing is usually not the barrier people expect: a layoff is generally treated as a qualifying life event that opens a Special Enrollment Period, so HealthCare.gov says people in that situation typically don't have to wait for open enrollment. Cost is the deciding factor for many households, because marketplace premium tax credits are based on expected annual income, and the IRS explains that a drop in income — like the one a mid-year layoff can cause — may put a household in the range that qualifies for substantial credits. Whether you qualify, and for how much, depends on your situation. The trade-off runs the other way on network and deductible progress, both of which generally start over. The points people weigh:
- A layoff is generally a qualifying life event that opens a Special Enrollment Period (HealthCare.gov).
- Premium tax credits are based on expected annual income, which a mid-year layoff can change (IRS).
- They're flexible on network and want to keep monthly costs predictable.
Can you wait and see before electing COBRA?
Often, yes — because COBRA generally allows up to 60 days to elect and the election generally applies retroactively, many people use the window deliberately rather than deciding on the day coverage ends. The practical effect is that the decision can frequently be deferred without leaving a gap. If no medical event comes up during those 60 days, some people skip COBRA and enroll in marketplace coverage instead. If a medical event does come up inside the window, electing COBRA retroactively can cover the bills that were incurred while the decision was still open. The approach depends on careful timing of premiums, since a retroactive election generally means paying the back premiums for the months being covered. It often helps to read the COBRA election notice closely — the exact deadlines and payment rules are spelled out there, and your plan's terms may differ.
What should you ask HR or the COBRA administrator?
The questions worth asking are the ones that turn COBRA from an abstraction into a number and a set of dates. The number is the exact monthly premium for continuing your current plan, because that is the figure that makes any comparison with a marketplace plan possible. The dates are when your current coverage actually ends and when your election deadline falls, since those two together set the size of the wait-and-see window described above. It also helps to ask when the election notice itself will arrive, because the 60-day clock generally runs from the loss of coverage or the date the notice is received, whichever is later. Subsidies are the last question — federal or state help is not available in every situation, and it tends to go unmentioned unless someone asks. The questions people commonly bring to that conversation:
- What is the exact monthly premium for COBRA continuation of my current plan?
- When does my current coverage end?
- When will I receive the COBRA election notice, and what is my election deadline?
- Are any subsidies (federal or state) available to me?
Official sources
- U.S. Department of Labor — COBRA Continuation Coverage (affiliate link — OffbookHR may earn a commission if you buy through this link. It does not affect ranking.)
- HealthCare.gov — Health coverage options if you're unemployed (affiliate link — OffbookHR may earn a commission if you buy through this link. It does not affect ranking.)
- Internal Revenue Service — The Premium Tax Credit — The Basics (affiliate link — OffbookHR may earn a commission if you buy through this link. It does not affect ranking.)