COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you keep your employer-sponsored health insurance for up to 18 months after leaving a job or losing coverage eligibility. The catch: you pay the full premium — both the employee and employer share — plus up to a 2% administrative fee, which typically makes COBRA significantly more expensive than marketplace alternatives.
ClearValue Lending is not affiliated with the Department of Labor, EBSA, or any insurer. This page is general financial education, not insurance advice. For COBRA election details, contact your former employer's benefits administrator or the DOL's Employee Benefits Security Administration at dol.gov/agencies/ebsa.
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.
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.
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.
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.