COBRA is the law that lets you stay on your old employer health plan after you leave a job, but it does not make that plan cheap. You go from paying an employee share of the premium to paying the entire premium yourself, plus an administrative fee. Understanding the real cost and the tight deadlines before you sign up can save you from a coverage gap or an avoidable overpayment.
What changed in 2026
- Marketplace subsidies remain the main comparison point. Whether enhanced premium tax credits are still in effect changes the math significantly, so check current subsidy rules before assuming COBRA or the marketplace is cheaper.
- COBRA premiums keep tracking employer plan cost increases, which have outpaced general inflation in most years, so expect a higher sticker price than your last paycheck stub implied.
- More employers are outsourcing COBRA administration to third-party firms, which can mean stricter notice and payment deadlines than a smaller employer might have enforced informally in the past.
How COBRA actually works
COBRA (the Consolidated Omnibus Budget Reconciliation Act) applies to employers with 20 or more employees. When you lose group coverage through a qualifying event — job loss, reduced hours, divorce, a dependent aging off the plan — you are entitled to continue the exact same plan, same network, same deductible accumulated so far. Coverage typically lasts 18 months for job loss, and up to 36 months for some other qualifying events.
You are not automatically enrolled. Your former employer or its administrator must send an election notice, and you then have 60 days from the later of that notice or your coverage end date to elect COBRA. If you elect it, coverage is retroactive to the day your old coverage ended, so there is no actual gap even if you decide a few weeks in.
What it costs
This is where COBRA surprises people. Your employer was likely covering 60 to 80 percent of the premium while you worked there. Under COBRA, you pay 100 percent of the premium plus up to a 2 percent administrative fee. A family plan that cost a few hundred dollars a month out of your paycheck can turn into well over a thousand dollars a month.
COBRA vs. the alternatives
| Option |
Keeps your doctors |
Typical cost |
Deductible resets? |
| COBRA |
Yes, same plan |
Full premium + 2% fee |
No, carries over |
| ACA marketplace plan |
Only if in-network |
Can be reduced by subsidies |
Yes, new plan year |
| Spouse or partner's plan |
Depends on their network |
Employee-share premium |
Depends on plan |
| Short-term medical plan |
Rarely, limited network |
Low premium |
Yes, and coverage gaps likely |
A high-deductible health plan bought on the marketplace can reset your deductible progress, which matters if you have already paid down a chunk of it for the year through your old employer plan.
When COBRA is worth it
COBRA makes the most sense when you are mid-treatment with a specific provider, close to meeting your annual deductible, or between jobs for a short, known window. It makes less sense if you qualify for meaningful marketplace subsidies, or if your household income dropped enough that a subsidized plan clearly wins on price.
FAQ
Does COBRA cover dental and vision too?
Yes, if your employer plan included them, you can continue those separately or together, subject to the same 60-day election window.
Can I switch from COBRA to a marketplace plan later?
Losing job-based coverage is itself a qualifying event for a marketplace special enrollment period, and COBRA exhaustion later opens another one. You generally do not have to wait for open enrollment.
Who actually pays the COBRA premium?
You do, in full, directly to the plan administrator. Some employers or severance packages temporarily subsidize part of it, so check your separation paperwork carefully.
What happens if I miss the 60-day deadline?
You lose the right to elect COBRA for that qualifying event. There is no extension, so mark the deadline the day you receive the notice.
This overview is general information, not personalized insurance or financial advice — confirm current premiums, subsidy eligibility, and deadlines with your plan administrator or a licensed advisor.
Where to go next
Compare your options further with what a high-deductible health plan actually means, see which costs qualify once you are covered in HSA eligible expenses for 2026, and read HSA vs FSA if you are also choosing a tax-advantaged account.