How does COBRA insurance work? Health insurance in between jobs

What is COBRA insurance?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a law that created a health insurance safety net. It lets you keep your employer's health insurance after you leave your job, are fired, or lose coverage due to reduced work hours. It does not give you a new health plan. 

COBRA lets you extend your former employer's health plan. You benefit from the same coverage, though your former employer stops contributing, which means you pay the entire premium.

Before the Affordable Care Act (ACA), people with pre-existing conditions had difficulty getting health insurance on the private market. Although the ACA removed pre-existing condition clauses, COBRA remains an option for keeping health insurance during the transition.

Who is eligible for COBRA?

You qualify for COBRA if you had health insurance through your employer and lose that coverage after leaving your job, being fired, a reduction in hours, or experiencing certain family changes. 

You and your family members qualify for COBRA after: 

• You quit your job
• You were fired (unless it was for "gross misconduct")
• Your hours were reduced
• You lost coverage because of a death or divorce

How does COBRA health insurance work?

COBRA lets you continue your employer's health insurance after you lose coverage. You will receive a COBRA notice if you are eligible. You have 60 days to enroll and pay the full premium. Your coverage starts on the date your employer-sponsored coverage ended. 

Here's how signing up for COBRA coverage works:

• If you become eligible for COBRA, your employer will notify the insurance company within 30 days of your last day.
• The health insurance company will send you information about how to sign up for COBRA and how much it will cost.
• You have 60 days to sign up. You can sign up retroactively during that period. You will be charged back premiums.
• You’ll pay all the costs because your former employer no longer pays part of the premium.
• You can keep your health insurance plan as you did before your employment ended. You will keep the same deductibles, copays, and network access.
• You can keep COBRA for at least 18 months or up to 36 months, depending on the qualifying event.

Can I get COBRA insurance if I quit my job?

Yes, you can get COBRA if you quit. Regardless of the reasons for leaving your job, you can elect COBRA within 60 days of your last day.

Nothing about your coverage, eligibility, or the time you can keep COBRA changes if you quit vs. a layoff or being fired.

How much does COBRA cost?

The cost of COBRA depends on the health insurance plan. According to the Kaiser Family Foundation, the average cost of an employer-sponsored family plan in 2025 was $26,993 a year. The employer paid a large portion of that cost when you were employed. With COBRA, you will pay the entire amount.

COBRA requires you to pay 100% of the health insurance premium plus up to a 2% administrative fee. Your former employer will no longer pay any part of the cost.

You can use Health Savings Account (HSA) funds to pay your COBRA premiums if you have one.

Why is COBRA so expensive?

COBRA is expensive because you pay the full cost of your employer health plan after you leave your job. While you were employed, your employer paid part of the premium. Under COBRA, you pay the full premium plus up to 2% in administrative fees.

What's the process for enrolling in COBRA?

When you are eligible for COBRA, you'll be notified by mail with enrollment instructions. You will have 60 days to notify your health plan administrator that you want to enroll. They will send you a COBRA eligibility notice. From there, you will select the option to enroll for yourself and any eligible family members who want to enroll.

The notice will also provide detailed information on the premiums you will need to pay and your payment options. You will need to make a payment within 45 days of submitting the application form for your benefits to apply.

Can I start or stop COBRA coverage at any time?

You can start COBRA at any point during the 60-day period, even if you first declined it. Your coverage will be retroactive to the date your employer coverage ended. You can also cancel COBRA coverage at any time.

COBRA coverage ends automatically when you:

• Reach the end of your coverage period
• Stop paying premiums
• Become eligible for Medicare

COBRA coverage also ends if the employer:

• Goes out of business
• Stops offering health insurance benefits to workers

If the employer changes health plans, you can switch to the new one under the same terms as other employees, but you can't keep the old one. If you have a family health plan, not all family members must enroll in COBRA.

What is mini-COBRA insurance?

Mini-COBRA permits employees of companies with 20 or fewer employees to continue health insurance coverage. It allows you to pay group rates for a specified time period. Most states have mini-COBRA laws for people who are employed by small businesses.

These state laws work like the federal COBRA law, but the length of eligibility may differ:

• Sixteen states allow mini-COBRA coverage for 18 months.
• New York and California allow mini-COBRA for 36 months.
• Connecticut lets residents have a mini-COBRA plan for 30 months.

Not all states allow mini-COBRA plans, and others have limited eligibility. State laws vary significantly, so check with your state’s Department of Insurance for specifics about mini-COBRA laws.

What are the alternatives to COBRA?

The main alternatives to COBRA are a Marketplace plan, a spouse's health plan, Medicaid, CHIP, and certain short-term health plans. Losing job-based coverage opens a Special Enrollment Period for a Marketplace plan. You do not have to wait for Open Enrollment. 

• The health insurance marketplace. Losing employer-sponsored coverage entitles you to buy an ACA plan outside the normal open enrollment period. Under the health care reform law, insurers can't charge much higher premiums or reject your application because of your health.
• The private market. You might be able to find an individual health insurance plan outside the marketplace that offers you better benefits and still costs less than COBRA.
• A spouse’s plan. If your spouse has their own insurance, you can likely be added to the plan.
• A catastrophic health plan. These ACA plans are available to people under 30 who face specific hardships. They have high deductibles but provide low-cost protection.
• Children’s Health Insurance Program (CHIP). If coverage for your kids is your main concern, see if they qualify for CHIP.
• Short-term health plans. Short-term plans provide coverage until your new plan starts  until you get new insurance, but they have some limitations. Some states don’t allow short-term plans. Other states restrict how long you can keep one.

If you decide on a COBRA alternative, check the provider networks and what's covered. Find out more about your options using our Health Insurance Finder tool.

Is COBRA insurance worth it?

COBRA is worth considering when keeping your current health plan, doctors, and benefits is more important than paying a higher premium. It also lets you keep the same coverage during a gap between jobs. Compare the total COBRA cost with Marketplace plans and other coverage before deciding. 

You may also want a COBRA plan if you expect new coverage to begin soon, such as with a new employer, but there is an anticipated gap before your new coverage kicks in.