Leaving a job, by choice, layoff, or termination, and wondering what happens to your health insurance? The answer for most employees at companies with 20 or more workers is COBRA, short for the Consolidated Omnibus Budget Reconciliation Act. It lets you keep your employer-sponsored health plan for a limited time, but there's a catch: you'll pay the full premium yourself, plus a small administrative fee.
COBRA is not a new plan or a government program; it's a continuation of the same coverage you had while employed. Your doctors, networks, deductibles, and out-of-pocket maximums stay the same. But unlike when your employer subsidized your premium, under COBRA you're responsible for the entire cost, typically 102% of the group rate. That can get expensive: often $500–$800 per month for individual coverage and more than $2,000 for family plans.
Who Is Eligible for COBRA?
To qualify, your employer must have had at least 20 employees on more than half of its working days in the prior calendar year. You (or your covered dependents) must have been enrolled in the group health plan the day before the qualifying event. Qualifying events include:
- Voluntary or involuntary job loss (except for gross misconduct)
- A reduction in work hours that makes you lose coverage
- Death of the covered employee
- Divorce or legal separation from the covered employee
- The covered employee becoming entitled to Medicare
- Loss of dependent child status under the plan
Each event determines how long coverage lasts. Job loss or hour reduction gives you up to 18 months; death, divorce, Medicare entitlement, or dependent status loss gives dependents up to 36 months. Two extensions can stretch the 18-month period: a Social Security disability determination, if the disability begins within the first 60 days of COBRA coverage, adds 11 months (for a total of 29), and a second qualifying event during your COBRA period, such as a divorce, can add 18 months (for a total of 36).
What If Your Employer Has Fewer Than 20 Employees?
Federal COBRA applies only to employers with 20 or more employees, so workers at smaller companies have no federal right to continuation coverage. Most states fill that gap with their own continuation laws, often called mini-COBRA. The details vary widely: New York and California generally allow up to 36 months, while other states set much shorter periods, and a few offer no continuation protection at all. If your employer is small, check your state insurance department's rules. Losing job-based coverage still opens a 60-day special enrollment period for a marketplace plan in every state.
How to Enroll in COBRA
Enrollment isn't automatic. After you separate, your employer has up to 30 days to notify the plan. Then the plan administrator has up to 14 days to send you a COBRA election notice. You have 60 days from the later of that notice or the date coverage would end to elect. Miss the election window, and you lose the right to continue coverage. Here's the timeline:
- Day 0: Qualifying event (last day of employment).
- Within 30 days: Employer notifies the plan.
- Within 14 days: Plan sends you the election notice.
- Within 60 days: You must elect COBRA in writing.
- Within 45 days of election: You must make your first premium payment (covering retroactive coverage).
Important: Once you elect, coverage is retroactive to the day after your employment ended, so there's no gap even if you decide later.
How Much Does COBRA Cost?
You pay the entire group premium: the portion your employer used to cover plus your own. That's 102% of the total cost, with the extra 2% covering administrative fees. For example, if your employer paid 80% of a $600 monthly premium, you paid $120. Under COBRA, you'd pay $612, more than five times your old share. For family coverage, it can easily exceed $2,000 per month, and the 2025 KFF Employer Health Benefits Survey put the average family premium at $26,993 a year, or about $2,250 a month. You generally pay COBRA premiums with after-tax dollars, since your pre-tax payroll deduction ends with your job. One exception: if you have a health savings account (HSA), you can use HSA funds to pay COBRA premiums, which the IRS lists as a qualified HSA expense. WellthCare, the first Health-to-Wealth Benefit System, offers a different approach: it provides $0-co-pay care and rewards verified preventive actions with store dollars and automatic retirement contributions, all while working alongside your existing coverage.
Alternatives to COBRA
Because COBRA is expensive, many people consider other options. Here are the most common:
- Marketplace plan (ACA exchange): You can enroll within 60 days of losing job-based coverage. If your income qualifies, you may get premium tax credits that make plans far cheaper than COBRA.
- Spouse's employer plan: Losing coverage triggers a special enrollment period, allowing you to join a spouse's plan even outside open enrollment.
- Short-term health insurance: Offers limited coverage but may have exclusions and isn't ACA-compliant.
- Medicaid: If your income drops significantly, you may qualify immediately.
Pro tip: Compare COBRA costs to marketplace plans. A divorced single mother earning $30,000 might pay a fraction of COBRA's premium for a subsidized ACA silver plan. The math shifted in 2026, though: the enhanced premium tax credits expired at the end of 2025, so marketplace subsidies are smaller now than they were from 2021 through 2025. If you have high medical needs or use in-network specialists, sticking with your current plan via COBRA might still be cheaper than hitting a new deductible.
What Happens When COBRA Ends?
COBRA coverage ends after 18 months for job loss, 29 with a disability extension, or 36 for dependents or after a second qualifying event. Before it ends, you need new coverage through a new employer's plan, a marketplace plan (you'll qualify for a special enrollment period), or Medicare if you're 65 or older. If you don't, you risk a coverage gap, no insurance, and a Medicare Part B late-enrollment penalty if you delay too long without other coverage.
One common mistake is treating COBRA as open-ended. It does not renew automatically, and it ends on schedule even if you haven't lined up your next plan. You'll receive a notice before coverage terminates, but the transition is your responsibility. Mark your calendar 60 days before COBRA expires so you have time to shop.
How Employee Benefits Systems Like WellthCare Can Help
While COBRA is a critical safety net, the benefits you choose while employed shape how much you lean on it later. The WellthCare ecosystem, a Health-to-Wealth Benefit System, works alongside an employer's ACA-compliant health plan and gets used first. Employees get $0-co-pay care, earn reward dollars at the WellthCare Store for verified preventive actions, and receive automatic retirement contributions funded by savings the employer commits. Because routine and preventive care runs through WellthCare first, fewer claims reach the primary plan, which can hold down costs over time. WellthCare is not a replacement for COBRA: it is not standalone health coverage, and it does not continue a group health plan after you leave. COBRA remains the legal mechanism for continuing that plan.
Final advice: You have 60 days to elect COBRA, but you don't have to decide immediately. Use that time to compare costs, check network providers, and explore marketplace options. If you think you might need COBRA later, for a surgery, you can wait until the last day of the 60-day window to decide; coverage will still be retroactive.