What COBRA Actually Is

COBRA continuation coverage is not a new insurance policy. It’s a legal right to keep the exact group health plan you already had — same insurance company, same network, same doctors, same benefits, and generally the same plan year — for a limited time after you leave a job. Nothing about the coverage itself changes. What changes is who pays for it.

Federal COBRA generally applies to private-sector employers with 20 or more employees on more than half of their typical business days in the prior calendar year, per the Department of Labor’s COBRA guidance. Your specific plan is run by a plan administrator, and the single most useful document you own right now is your election notice — it names your administrator, states your deadlines, and states your actual premium. Nothing in this article substitutes for reading that notice carefully.

Do You Qualify? (Yes, Even If You Quit)

Start here, because it’s the assumption that trips up the most people: if you resigned, you still generally qualify for COBRA. Voluntarily leaving a job does not disqualify you. The only real exclusion is termination for gross misconduct — a narrow standard, not ordinary poor performance or a routine layoff.

Beyond leaving or losing a job, other events can trigger COBRA rights: a reduction in your hours that drops you below your plan’s eligibility threshold, and — for a spouse or dependent, specifically — divorce or legal separation from the covered employee, the covered employee’s death, the covered employee becoming entitled to Medicare, or a dependent child aging off the plan.

What COBRA Costs Per Month (and Why It’s So High)

Under COBRA, a plan can charge you up to the full cost of the premium — the portion you used to pay plus the portion your employer used to pay — plus a permitted administrative charge of up to 2%, for a maximum of 102% of the total premium. If you’re on the disability extension described below, that administrative charge can rise to as much as 50% for the extension months, for a maximum of 150% of the total premium during that period, per federal COBRA rules.

That arithmetic, not any penalty, is the entire explanation for the shock. Employers typically fund a large majority of the premium for active employees — on average, employees contribute somewhere around 16% of the premium for single coverage and 26% for family coverage, with the employer picking up the rest. When that employer contribution disappears, the number you owe jumps to a multiple of what you were used to seeing on your pay stub, even though the underlying plan hasn’t changed at all.

There is no meaningful national average to publish here, because your cost depends entirely on your former employer’s specific plan. The one number that matters is the one printed on your election notice. If your family was on the plan, electing coverage only for the members who actually need it — rather than the whole family — will lower what you owe each month.

It also helps to understand what that premium is actually paying for once you’re using the plan day to day — our guide to how deductibles and out-of-pocket maximums work covers that in full.

How Long Does COBRA Last?

This is one of the most searched COBRA questions, and one of the most inconsistently answered — because the honest answer genuinely depends on which qualifying event applies to you. Here’s the full set, drawn from CMS’s COBRA continuation coverage guidance and verified precisely rather than reduced to one number.

The 18-month period is the standard: it applies when the qualifying event is the covered employee’s own job loss or reduction in hours. It can extend to 29 months if the Social Security Administration determines that someone on the plan is disabled — the determination generally needs to fall within your first 60 days of COBRA coverage, and you must notify the plan administrator within 60 days of that determination and before your original 18 months run out.

The 36-month period applies to a different set of events, mainly ones that affect a spouse or dependent rather than the employee directly: divorce or legal separation, the covered employee’s death, the covered employee becoming entitled to Medicare, or a dependent child aging off the plan. If one of these happens to a family member during an existing 18-month COBRA period, it can also extend that family member’s coverage out to a total of 36 months.

One detail that’s easy to miss: when your COBRA coverage runs all the way to the end of its maximum period — in other words, when you exhaust it rather than cancel it early — that itself opens a new special enrollment opportunity for marketplace coverage. More on that below.

Your Decision Window: You May Have More Time Than You Think

This is the part almost no one explains clearly, and it’s the single most valuable thing on this page. COBRA doesn’t require an instant decision, and it doesn’t require you to pay a premium just to preserve the option. Here’s the actual sequence:

1. Your employer coverage ends

   The date tied to your qualifying event — the day your old plan stops covering you.

2. Your election notice arrives

   Typically within 44 days of that date, the outer limit set by law.

3. Your election period runs

   You get 60 days from whichever is later — the date your coverage ended, or the date the notice was provided to you — to decide.

4. You elect, or you don’t

   You’re free to use the entire 60 days to decide. Nothing is owed while you wait.

5. Your first payment is due

   45 days after you elect, covering every month back to when your coverage ended.

6. Coverage applies back to the day your old plan ended

   As long as you elected within your window and pay everything owed, your coverage is treated as if it never lapsed.

Those conditions matter as much as the feature itself. While you’re deciding, any care you receive isn’t paid by the plan until you actually elect and pay — a provider may bill you directly in the meantime, and you’ll need to sort that out with them or the plan once coverage is in place. Once you do elect, you owe the full retroactive premium for every month back to your coverage-end date, not just going forward. And the 60-day deadline is absolute: miss it, and COBRA is gone for that qualifying event, with no second chance.

COBRA or a Marketplace Plan?

This is the decision that actually costs or saves you money, and it’s worth making deliberately rather than by default. Losing job-based coverage is a qualifying life event that opens its own 60-day special enrollment period for a marketplace plan, according to HealthCare.gov — a separate clock from your COBRA election period, running on roughly the same timeline.

Premium assistance is the biggest lever here, and it scales with your income — the lower your income after a job loss, the more a marketplace plan tends to help. Our guide to how that assistance is calculated and where it phases out covers the mechanics in full. If you land on a marketplace plan, comparing the plan types you’ll be choosing between is worth doing before you commit — see our HMO vs. PPO comparison.

None of this means COBRA is a bad choice — it’s genuinely the right one for some readers: someone mid-treatment with a specific specialist, someone who’s already cleared a large deductible this year, someone whose income hasn’t actually dropped, or someone whose employer plan is unusually generous. And if you’re weighing a stopgap for the days before other coverage begins, be cautious about short-term medical plans — they aren’t comprehensive coverage and commonly exclude pre-existing conditions. One option worth a moment’s thought before either of the above: if your spouse has coverage through their own employer, losing your job generally opens a window for you to join their plan, and it’s often the cheapest option of the three.

Are COBRA Premiums Tax Deductible?

The honest answer is conditional, and a flat “yes” would mislead most readers. Per IRS Publication 502, COBRA premiums can count as part of your itemized medical expense deduction — but only the portion of your total qualifying medical expenses, premiums included, that exceeds 7.5% of your adjusted gross income, and only if you itemize on Schedule A instead of taking the standard deduction. For most filers, who take the standard deduction, this doesn’t translate into any actual tax benefit.

There’s one genuinely useful exception worth knowing: if you still have funds in a Health Savings Account from a prior high-deductible plan, IRS Publication 969 specifically allows HSA money to pay COBRA premiums tax-free — one of only a handful of situations where insurance premiums qualify as an HSA-eligible expense. That’s true even though most health insurance premiums cannot be paid from an HSA at all. See our HSA vs. FSA comparison for how these accounts work more broadly.

If your former employer is subsidizing part of your COBRA premium as part of a severance arrangement, the tax treatment can differ from what’s described here — that’s a detail worth raising with a tax professional directly.

Cancelling COBRA and What Happens When It Ends

You can drop COBRA at any time, either by notifying your plan administrator or simply stopping payment. There’s a 30-day grace period for ongoing monthly payments after each due date; miss that window entirely and coverage ends, typically back to the last period you actually paid for.

The exception is reaching the natural end of your coverage: when COBRA exhausts at its maximum duration (18, 29, or 36 months, depending on your situation), that opens a fresh 60-day special enrollment period for marketplace coverage. Before your COBRA end date arrives, it’s worth comparing marketplace options in advance so you’re not choosing under pressure.

Two Situations With Different Rules

State continuation coverage

Some states run their own continuation programs — often called “mini-COBRA” — for employees of smaller employers not subject to federal COBRA, and the durations and terms can differ from what’s described in this article. If your former employer has fewer than 20 employees, check with your state’s department of insurance to see what applies to you; many publish consumer guides similar to this one.

Medicare

If you’re eligible for or already enrolled in Medicare, COBRA interacts with it in ways that genuinely matter and that this article doesn’t cover — get advice specific to that situation before deciding anything.

Frequently Asked Questions

What is COBRA insurance?

COBRA is a federal law that lets you keep the exact group health plan you had through a job — same insurer, same network, same benefits — after you leave, for a limited time. You pay the full premium yourself, since your employer stops contributing.

Can I get COBRA if I quit my job?

Yes. Voluntarily resigning does not disqualify you from COBRA. The only exclusion is termination for gross misconduct.

How much does COBRA cost per month?

It depends entirely on your former employer’s plan, so there’s no meaningful national figure to quote. You can be charged up to the full premium — both what you and your employer were paying — plus an administrative fee of up to 2%. The exact number is on your election notice.

Why is COBRA so much more expensive than what I was paying?

Because your employer was covering most of the premium while you worked there — on average, roughly four-fifths of it for single coverage. COBRA removes that contribution, so for the first time you’re paying close to the full cost.

How long does COBRA coverage last?

Generally 18 months if you lost your job or had your hours cut. It can extend to 29 months with a disability extension, or up to 36 months for a spouse or dependent affected by certain other qualifying events, like divorce or a covered employee’s death.

How long do I have to decide?

60 days from whichever is later: the date your coverage ended, or the date your election notice was provided. If you elect, you then have 45 days to make your first payment.

Does COBRA coverage start immediately, or is it retroactive?

It’s retroactive. If you elect within your 60-day window and pay what’s owed, your coverage is backdated to the day your old plan ended, even if you used most of the window to decide.

Can I sign up for COBRA later if I get sick?

As long as you’re still inside your 60-day election window, yes — you can wait, then elect and pay the back premiums if you need care, and that coverage applies retroactively. Once the window closes, the option is gone.

Is COBRA cheaper than a marketplace plan?

Usually not. COBRA carries no subsidy, while a marketplace plan is often eligible for income-based premium tax credits, especially if your income has dropped since losing your job. COBRA can still be worth the higher cost if you’re mid-treatment or have already met a large deductible this year.

Can I switch from COBRA to a marketplace plan later?

It’s harder than it sounds. Voluntarily dropping COBRA generally doesn’t open a new marketplace special enrollment period — you’d typically wait for the marketplace’s annual Open Enrollment. Letting COBRA run out completely does open a new 60-day enrollment window.

Can my spouse or children get COBRA separately?

Yes. Each qualified family member has an independent right to elect coverage. A spouse can elect even if the employee declines, and each dependent can make their own choice.

Are COBRA premiums tax deductible?

Only as part of itemized medical expenses that exceed 7.5% of your adjusted gross income, and only if you itemize instead of taking the standard deduction. For most people, that means no deduction in practice.

How do I cancel COBRA?

You can drop it at any time by notifying your plan administrator or simply stopping payment. Voluntarily cancelling mid-year usually won’t open a marketplace special enrollment period, so line up your next coverage before you do it.

What happens when my COBRA runs out?

Reaching the end of your maximum coverage period opens a 60-day special enrollment period for marketplace coverage, so you have a guaranteed window to get covered again.