What Is COBRA Health Insurance and How Does It Work?

Updated: August 21, 2026

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Key Takeaways
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COBRA lets you keep your employer-sponsored health plan after job loss, divorce or another qualifying event.

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COBRA enrollees pay 100% of the full group premium plus a 2% administrative fee.

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A subsidized Marketplace Silver plan costs less than COBRA for most workers who lose jobs and see reduced income. Check your income against current APTC thresholds at HealthCare.gov before electing.

What Is COBRA Health Insurance?

COBRA is a federal law that lets you keep your employer-sponsored group health plan after losing coverage. The Consolidated Omnibus Budget Reconciliation Act of 1985 applies to plans from private-sector employers with 20 or more employees and from state and local governments, per the U.S. Department of Labor. 

COBRA doesn't create new coverage. It continues what you already had, including the same benefits, network and cost-sharing terms. You pay up to 102% of the plan's total cost, including the share your employer previously covered.

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THE COBRA COST MOST ENROLLEES OVERLOOK

You can keep your exact plan through COBRA, but you pay both your share and your employer’s share of the monthly premium. Before electing, check whether your income qualifies for a premium tax credit for health insurance. Your 60-day COBRA election window and your Marketplace Special Enrollment Period share the same timeline.

Who Is Eligible for COBRA Coverage?

COBRA eligibility depends on two conditions: the employer plan must be subject to COBRA law and a qualifying event must occur.   

COBRA covers plans from private-sector employers with 20 or more employees, measured on more than 50% of regular business days in the prior year. State and local government plans are also subject to COBRA law.

What Qualifies as a Triggering Event?

A qualifying event is any circumstance that causes loss of employer health coverage under COBRA, such as job loss, reduced hours, divorce or the death of a covered employee. The event type determines who can enroll and how long coverage lasts. 

Spouses and dependent children qualify under a broader set of triggers than employees do. These also count as qualifying life events under federal law and may open other coverage options at the same time.

Job loss (not due to gross misconduct)
Employee, spouse, dependent children
Reduction in hours of employment
Employee, spouse, dependent children
Divorce or legal separation
Spouse, dependent children
Death of the covered employee
Spouse, dependent children
Covered employee becomes entitled to Medicare
Spouse, dependent children
Loss of dependent child status (e.g., turning 26)
Dependent child

Who Can Be Covered Under COBRA?

Three beneficiary groups can elect COBRA continuation coverage: the covered employee, the employee's spouse and dependent children covered under the plan at the time of the qualifying event. Each group may elect independently, regardless of whether other family members elect.

This independence matters most when a qualifying event affects only one family member, such as divorce or a child aging out of dependent status.

How Much Does COBRA Cost in 2026?

COBRA premiums equal up to 102% of your employer plan's full cost, including both the employee and employer portions plus a 2% administrative fee. While employed, your employer covered a portion of that cost. Under COBRA, that contribution stops entirely. Check your election notice or your Summary Plan Description, the employer document detailing your plan's benefits and costs.

COBRA individual
Enrollee pays 100% plus 2% fee
COBRA family
Enrollee pays 100% plus 2% fee
Marketplace Silver, no APTC
Enrollee pays 100%
Marketplace Silver, with APTC
After subsidy applied
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MONEYGEEK EXPERT TIP

If a Social Security Administration disability determination applies, COBRA premiums for months 19 through 29 can reach 150% of the plan's full cost, per the U.S. Department of Labor. This 11-month extension requires the SSA to determine disability before day 60 of COBRA coverage. The beneficiary must notify the plan within 60 days of the determination.

How Long Does COBRA Coverage Last?

COBRA coverage lasts 18 months for job loss or a reduction in hours, per the U.S. Department of Labor. Divorce, the covered employee's death, Medicare entitlement and a dependent child's loss of dependent status entitle those qualified beneficiaries to 36 months instead.   

The 36-month maximum applies only to family members who lose coverage through divorce, death or Medicare entitlement. Job loss gives employees 18 months, not 36. If you're the one who lost the job, your window is shorter than your dependents' window.

Job loss or reduction in hours
Employee, spouse, dependent children
18 months
Divorce or legal separation
Spouse, dependent children
36 months
Death of covered employee
Spouse, dependent children
36 months
Covered employee becomes entitled to Medicare
Spouse, dependent children
36 months
Loss of dependent child status
Dependent child
36 months
Second qualifying event during existing COBRA period
Spouse, dependent children
Up to 36 months total
SSA disability determination (before day 60 of COBRA)
All qualified beneficiaries in the family
Up to 29 months
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HAVE ANOTHER QUALIFYING EVENT?

A second qualifying event during an existing 18-month COBRA period, such as divorce or the covered employee's death, can extend coverage to 36 months total, per the U.S. Department of Labor. Notify your plan administrator as soon as a second qualifying event occurs. You have at least 60 days from the event to give notice.

What Does COBRA Cover?

COBRA continuation coverage is identical to the employer plan you had before your qualifying event. The same provider network, drug formulary, cost-sharing terms and benefits all carry over. If your employer plan covered dental and vision, COBRA continues both. 

Any plan changes the employer makes for active employees during open enrollment apply to COBRA participants as well. The benefit set can't be expanded or reduced while you're on COBRA.

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    Medical and Hospitalization Services

    All inpatient and outpatient services covered under the prior employer plan continue unchanged under COBRA, including the same in-network providers, copays and annual deductible.

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    Prescription Drug Coverage

    COBRA preserves the existing formulary and pharmacy cost-sharing tiers. Prices and tier structure don't reset when you move from active employee to COBRA coverage status.

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    Mental Health and Substance Use Services

    COBRA covers mental health benefits at the same level as the prior employer plan, consistent with ACA mental health parity requirements.

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    Dental and Vision if Part of the Group Plan

    If dental or vision coverage was included within the employer group health plan subject to COBRA, it continues. Stand-alone dental or vision plans require separate COBRA elections.

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    Preventive Care at No Cost

    ACA-mandated preventive services that were covered at no cost under the prior plan remain at no cost under COBRA, provided the enrollee uses in-network providers.

COBRA coverage mirrors the group health plan in effect at the time of the qualifying event. Benefits may change at annual plan renewal.

How Do You Sign Up for COBRA?

COBRA enrollment begins when your plan administrator sends you an election notice. The plan administrator has 14 days from when the employer notifies it to send that notice, per the U.S. Department of Labor. The employer must notify the plan administrator within 30 days of a qualifying event it controls. 

You then have 60 days from the notice date to decide. During that window, compare Marketplace plan costs at HealthCare.gov. If your net Marketplace cost after tax credits is less than your COBRA premium, enroll through your Special Enrollment Period.

  1. 1
    Receive Your COBRA Election Notice

    The plan administrator must send a COBRA election notice within 14 days of learning about the qualifying event. If the employer acts as its own plan administrator, the notice is due within 44 days. The notice contains the full monthly premium, election deadline and payment instructions.

  2. 2
    Elect Coverage Within 60 Days

    You have 60 days from the date of the election notice or the date coverage ends, whichever is later, to elect COBRA, per DOL rules. Missing this deadline permanently forfeits your right to continuation coverage for that qualifying event.

  3. 3
    Make Your First Premium Payment Within 45 Days

    After electing, you have 45 days to submit the first payment, per DOL rules. Coverage is retroactive to the qualifying event date once payment clears, so claims from the election window period are covered.

  4. 4
    Pay Monthly Premiums on Time

    Subsequent premiums are due on the first day of each coverage month with a 30-day grace period. Missing the grace period terminates COBRA coverage permanently.

  5. 5
    Notify the Plan Administrator of Any Status Changes

    If you gain coverage under another group health plan or become entitled to Medicare during your COBRA period, notify the plan administrator promptly. Both events terminate COBRA early under DOL rules.

COBRA Alternatives

The 60-day Special Enrollment Period begins the day you lose job-based coverage. For most people, a Marketplace Silver plan with tax credits costs less than COBRA. Medicaid is free at or below 138% of the federal poverty level in expansion states. A family member's employer plan is your cheapest option if you don't qualify for Medicaid.

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    Marketplace Plans

    Marketplace plans through HealthCare.gov cover the same categories of care as most employer plans and won't reject applicants for pre-existing conditions. At $30,000 annual income, a Silver plan with cost-sharing reductions drops the annual deductible from $7,000 to under $900. Enroll within 60 days of losing coverage through your Special Enrollment Period.

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    Spouse's or Parent's Plan

    A family member's employer plan is your cheapest COBRA alternative if you don't qualify for Medicaid and have access to one. Employees pay 20–30% of the full premium while COBRA runs 102%, so dependent costs are far lower. Notify HR within 30 days. Adults under 26 can join a parent's plan.

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    Medicaid

    Medicaid provides free or low-cost coverage for adults with household incomes at or below 138% of the federal poverty level in Medicaid expansion states. You can apply year-round through HealthCare.gov or your state Medicaid agency. Non-expansion states have lower income thresholds and different eligibility rules.

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    Short-Term Health Insurance

    Short-term health plans have lower monthly premiums than COBRA but won't cover pre-existing conditions and aren't required to cover mental health care or prescription drugs. These gaps matter most for anyone with ongoing health needs or regular medications. They're the right choice for healthy adults who need a coverage bridge of one to three months.

Is COBRA Worth It?

COBRA is the right choice in two situations: mid-treatment continuity with in-network providers, or a coverage gap of three months or less before new employer coverage starts. 

Alternatives to COBRA insurance include Marketplace plans, Medicaid, spousal coverage and short-term health plans, each with distinct cost and coverage trade-offs.

Mid-treatment with a specialist in your current network
COBRA
Switching resets your deductible and may move your provider out of network mid-care.
Already met 50% or more of your annual deductible
COBRA
A plan change resets the deductible to zero. COBRA may save more than the reset costs.
Income below 400% of FPL
Marketplace Silver plan with APTC
An advance premium tax credit can reduce the net Marketplace premium below the full COBRA cost.
Income below 138% of FPL in an expansion state
Medicaid
Medicaid coverage is free or near-free. No COBRA math applies.
Eligible for a spouse's or partner's employer plan
Spouse's employer plan

Employer-sponsored plans cost employees 20–30% of the full premium, far less than COBRA's 102%.

Healthy, needs coverage 1–3 months, no APTC eligibility

Short-term health plan

Short-term plans cost less than COBRA but don't cover pre-existing conditions and are not ACA-compliant.

APTC eligibility and Marketplace Silver costs are based on 2026 CMS data. Short-term plans aren't ACA-compliant and don't cover pre-existing conditions.

People who retire before 65 and aren't yet eligible for Medicare often have the longest coverage gaps, and health insurance for early retirees through the ACA Marketplace or Medicaid may cost less than COBRA.

COBRA Insurance: FAQ

We've answered the most frequently asked questions about COBRA health insurance below, covering eligibility, cost and enrollment deadlines:

About Mark Fitzpatrick

Mark Fitzpatrick, Licensed P&C Insurance Expert, MoneyGeek

Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident expert in insurance and economics. He has spent nearly a decade covering the insurance market at LendingTree and MoneyGeek, analyzing hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.

His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.

Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.

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