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COBRA Basics After a Layoff

COBRA lets you keep your employer health insurance after a layoff — at the full cost, including the part your employer used to pay. Here's how to decide whether to take it and what to compare it against.

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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?

Same plan, full price. Your employer was likely paying 70–80% of the premium while you worked there. On COBRA, you generally pay 100% plus up to a 2% administrative charge — often $600–$2,000 per month for an individual, more for family coverage. You keep the same network, the same deductible progress for the year, and the same prescription coverage. Your actual figures depend on your plan.

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?

  • 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?

  • A layoff is generally treated as a qualifying life event that opens a Special Enrollment Period on the marketplace, so HealthCare.gov says people in that situation typically don't have to wait for open enrollment.
  • 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.
  • They're flexible on network and want to keep monthly costs predictable.

Can you wait and see before electing COBRA?

Because COBRA generally allows up to 60 days to elect retroactively, many people use this window deliberately. If no medical event comes up, some people skip COBRA and enroll in marketplace coverage instead. If a medical event does come up within those 60 days, electing COBRA retroactively can cover the bills.

This approach depends on careful timing of premiums, so 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?

  • 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

Frequently asked questions

Is COBRA worth it after a layoff?

Often only in specific situations: you are mid-treatment or mid-pregnancy and continuity matters, you have already met a big chunk of your deductible for the year, or you expect new employer coverage within 1–3 months. Otherwise the ACA marketplace is frequently cheaper, because on COBRA you generally pay the full group premium plus up to a 2% fee.

How long do you have to elect COBRA?

Generally 60 days from the loss of coverage or the date you receive the COBRA election notice, whichever is later — and the election generally applies retroactively. Many people use that window deliberately to wait and see whether a medical event comes up. Confirm the exact deadlines on your own election notice.

How much does COBRA cost per month?

Generally 100% of the premium plus up to a 2% administrative charge — often $600–$2,000 per month for an individual, and more for family coverage, since your employer is no longer paying its share. Your actual figures depend on your plan.

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