What is COBRA health insurance and how does it work?

COBRA is a federal law that gives employees and their covered dependents the right to continue employer-sponsored group health insurance coverage for a limited period after certain qualifying events. It is administered by the Department of Labor's Employee Benefits Security Administration (EBSA). Understanding what COBRA costs — and what it competes with — is critical before deciding whether to elect it.

What triggers COBRA eligibility

• Voluntary or involuntary job loss (except termination for gross misconduct)
• Reduction in work hours that causes loss of health coverage eligibility
• Divorce or legal separation from the covered employee
• Covered dependent aging off the plan (typically at 26)
• Death of the covered employee
• The covered employee becoming eligible for Medicare

How long does COBRA last?

COBRA continuation coverage generally lasts up to 18 months for employees and their dependents following job loss or reduced hours. It can extend to 36 months for dependents affected by divorce, death of the employee, or the employee enrolling in Medicare. Disability extensions are also possible. Coverage ends early if you become eligible for Medicare or another group health plan, or if you stop paying premiums.

COBRA costs — why it shocks people

When you had employer-sponsored coverage, your employer typically paid a significant portion of the premium — often 70–80% for employee-only coverage. Under COBRA, you pay the full premium (both shares) plus up to a 2% administrative fee. According to KFF's annual Employer Health Benefits Survey, the average employer plan premium for a single employee in 2024 was approximately $8,951/year; employers paid about $7,076 (79%) and employees paid about $1,874. Under COBRA, you would pay the full $8,951 plus the admin fee. Compare that against marketplace alternatives before electing COBRA.

COBRA vs. ACA marketplace — which is cheaper?

If you lose job-based coverage, losing that coverage is a qualifying life event for a marketplace Special Enrollment Period. If you are eligible for a Premium Tax Credit (income between 100% and 400% of the federal poverty level), a marketplace silver or gold plan may cost significantly less than COBRA — even after comparing deductibles and networks. Use HealthCare.gov's Premium Tax Credit estimator to compare your net marketplace cost against your COBRA quote before electing. Also check Medicaid eligibility if your income is below ~138% FPL.

You generally have 60 days from your coverage loss date (or the date COBRA notice is provided, whichever is later) to elect COBRA. If you decline COBRA and later regret it, you may elect it retroactively within that 60-day window — but you would owe back-premiums from the coverage-loss date.