Quick answer: COBRA lets you keep your exact employer health plan after you leave a job, but you pay the full cost yourself, plus a 2% administrative fee. That usually makes it the most expensive of your options — and whether it is worth the extra cost depends on one thing most explainers skip: what you would actually give up by switching.
What COBRA Actually Is
COBRA — the Consolidated Omnibus Budget Reconciliation Act, a federal law in place since 1986 — requires many employer group health plans to let you continue the exact same coverage for a limited time after certain events, most commonly leaving a job. “Continuation coverage” is the technical term: you keep the same plan, same network, same doctors, and typically the same drug and dental coverage, just paying the bill yourself.
COBRA applies to employers with 20 or more employees. If you worked for a smaller employer, federal COBRA does not apply to you — but many states run their own “mini-COBRA” laws extending similar continuation rights to smaller employers. Check your state’s rules before assuming you have no options; this is worth doing before you assume the only route is a marketplace plan.
⭐ The Subsidy That Existed and No Longer Does
This matters because outdated information about it is still circulating widely.
Under the American Rescue Plan Act, the federal government covered 100% of COBRA premiums for eligible people — but only from 1 April 2021 through 30 September 2021. That subsidy ended years ago. As of 2026, there is no equivalent federal programme paying your COBRA premium; you should assume you will pay the full amount yourself unless you have specific, current confirmation otherwise.
What COBRA Costs
While you were employed, your employer typically covered a substantial share of the premium — often 70% to 80% for many employer plans. Once that ends, you pay the entire premium yourself, and the law allows the plan to add an administrative charge of up to 2%, for a maximum of 102% of the full group rate.
We do not publish a specific average premium figure here — it depends entirely on your former employer’s plan, your coverage tier and your state, and any number printed in an article goes stale within a year. What is stable is the comparison worth making: run an actual marketplace quote against your specific COBRA premium before deciding, rather than assuming either option is automatically cheaper. Enhanced ACA subsidies expired at the end of 2025, so a marketplace plan is not automatically the cheaper choice the way it may have been in recent years — see our guide to ACA metal tiers and subsidies for how that comparison actually works now.
⭐ If You Are Now Self-Employed, This Might Be Tax-Deductible
This is genuinely underused. If you left a W-2 job, elected COBRA, and are now generating self-employment income with no access to another subsidized employer plan, those COBRA premiums can qualify for the self-employed health insurance deduction under IRC Section 162(l) — the same 100% above-the-line deduction covered in our self-employed health insurance guide. It is capped at your net self-employment income and does not apply for any month you had access to subsidized coverage elsewhere, so check the detail rather than assuming it applies automatically — but it is a real reduction many COBRA users never claim.
Duration and Qualifying Events
| Qualifying event | Coverage length |
|---|---|
| Job loss (other than gross misconduct) or reduced hours | Up to 18 months |
| Divorce, legal separation, or the employee becoming entitled to Medicare | Up to 36 months |
| Death of the covered employee | Up to 36 months |
| A dependent child aging out of the plan | Up to 36 months |
| Disability of a qualified beneficiary, meeting Social Security’s definition | Can extend the initial 18 months by up to 11 additional months |
Coverage starts on the date of the qualifying event, provided premiums are paid, and it is retroactive — meaning if you take time deciding, you owe premiums back to that date once you elect coverage. You have 60 days from the qualifying event or the notice, whichever is later, to decide, and you can change your mind and elect coverage within that same window even after initially declining.
When COBRA Makes Sense
- You are mid-treatment. Switching plans mid-course of treatment, especially with a specialist, can mean re-establishing prior authorizations or losing continuity of care. Staying on the exact same plan avoids that entirely.
- You have already met your deductible for the year. A new plan generally means starting that spending count over from zero. Late in the year, staying on your current plan can be worth the higher premium.
- You travel frequently or split time between states. Large employer-sponsored networks are often broader geographically than an individual marketplace plan sold in a single state.
- You expect the gap to be genuinely short and want zero disruption while you sort out longer-term coverage.
When It Usually Does Not
- You qualify for ACA premium tax credits. A subsidised marketplace plan can cost meaningfully less than COBRA’s full premium — run the numbers rather than assuming.
- You are early in the plan year. With little or no deductible met yet, the continuity argument above matters less.
- Coverage could last a while. At up to 102% of the full group rate for as long as three years, the total cost adds up fast compared with other routes.
- Your new employer’s coverage starts soon. A short bridge often does not justify COBRA’s premium when a start date is already set.
How to Actually Sign Up
- Your employer or plan administrator must notify you of your COBRA rights after a qualifying event. If it has been more than a few weeks and you have heard nothing, contact HR directly rather than waiting.
- You have 60 days to elect coverage from whichever is later: the qualifying event or the notice.
- Compare the actual COBRA premium against a real marketplace quote for your ZIP code before deciding — see our metal tiers guide for what to compare beyond the sticker price.
- If your income is low, check Medicaid eligibility too — it has no open enrollment period and, in expansion states, costs nothing.
What We Corrected on This Page
- It presented the ARPA COBRA premium subsidy as current. That 100% federal subsidy was real, but only ran from 1 April to 30 September 2021 — nearly five years ago. Presenting it without an end date could lead a reader to expect a subsidy that no longer exists.
- It stated COBRA applies to employers with “fifty or more” employees. The correct federal threshold is 20 or more employees. Fifty is the threshold for a different law, the ACA’s employer mandate.
- An internal link on “COBRA health” pointed to an article about senior citizen health insurance in India — a different country and a completely unrelated product.
- Another link, discussing the cost of COBRA, pointed to a page about life insurance for seniors — also unrelated to the sentence it sat in.
- The word “physicians” was linked as “physicists” to a Wikipedia page about the physics profession — an evident typo left live as a link.
- It quoted a specific average COBRA premium ($599 a month) with no date or source, and flatly stated marketplace coverage is always cheaper than COBRA, which depends entirely on income and subsidy eligibility rather than being true in general.
- The “benefits” section and the “6 pros” list repeated much of the same content under two different headings.
Frequently Asked Questions
COBRA is the Consolidated Omnibus Budget Reconciliation Act, a federal law in place since 1986 that lets you continue your exact employer group health plan after certain qualifying events, most commonly job loss. You pay the full premium yourself, plus up to a 2% administrative fee, for a defined period rather than the employer continuing to subsidise it.
No. A temporary 100% federal COBRA subsidy existed under the American Rescue Plan Act, but only from 1 April to 30 September 2021. As of 2026 there is no equivalent federal subsidy programme, so you should expect to pay the full premium plus the administrative fee yourself unless you have specific current confirmation otherwise.
Generally 18 months for job loss or reduced hours, extending to 36 months for events such as divorce, the covered employee becoming eligible for Medicare, death, or a dependent child aging off the plan. A disability meeting Social Security’s definition can extend the initial 18-month period by up to 11 further months.
It depends on your income. If you qualify for ACA premium tax credits, a marketplace plan is often cheaper than COBRA’s full premium. If you do not qualify for a subsidy, COBRA’s group rate can sometimes compete, since group coverage is often more comprehensive than an unsubsidised individual plan. Run an actual quote for both rather than assuming either is automatically cheaper.
Federal COBRA applies to employers with 20 or more employees. If your former employer was smaller than that, federal COBRA does not apply, but many states run their own continuation coverage laws, often called mini-COBRA, that extend similar rights to employees of smaller employers. Check your specific state’s rules.
Possibly. If you left a W-2 job, elected COBRA, and now have self-employment income with no access to another subsidized employer plan, those premiums can qualify for the self-employed health insurance deduction under IRC Section 162(l). The deduction is capped at your net self-employment income and does not apply for any month you had access to subsidized coverage elsewhere.
Sources
- US Department of Labor — COBRA continuation coverage rules and employee rights
- HealthCare.gov — comparing COBRA against marketplace coverage
- IRS.gov — self-employed health insurance deduction rules
Related reading: Self-employed health insurance options | ACA metal tiers explained | Medicaid eligibility explained | Health and life insurance guide
Editorial note: This article describes United States federal law and is general information, not legal, tax or insurance advice. We are not licensed insurance producers or tax preparers. COBRA rights, state continuation laws and tax rules change and vary by state — confirm your specific situation with your plan administrator, a licensed adviser, or a tax professional. Last updated: August 2026. See our sourcing policy.
