COBRA Health Insurance
COBRA lets you keep your employer's health plan after leaving a job - but you pay the full premium. Here's when it makes sense and when the ACA marketplace is a better deal.
COBRA vs. ACA Marketplace
For most people who lose job-based coverage, the ACA marketplace is a better financial choice than COBRA. Losing job-based coverage is a qualifying life event that triggers a 60-day Special Enrollment Period. If you qualify for ACA subsidies, your marketplace premium could be dramatically lower than COBRA.
When COBRA Is Worth the Cost
COBRA is worth considering if: you're in the middle of a pregnancy or ongoing treatment and don't want to risk a coverage gap or provider change; you've already met your annual deductible and have significant remaining care planned; or your employer plan covers something (like a specific specialist) that ACA plans in your area don't.
COBRA Election Strategy
You don't have to elect COBRA immediately. You have 60 days to decide, and if you elect, coverage is retroactive. This means you can wait to see if you have a major medical event before paying COBRA premiums. If you stay healthy, let the 60 days expire and enroll in an ACA plan instead.
Frequently Asked Questions
How much does COBRA cost?
COBRA is expensive because you pay the full premium - both the employee and employer share - plus a 2% administrative fee. The average employer-sponsored plan costs $22,463/year for family coverage. On COBRA, you pay all of that. Most people pay $500-$700/month for individual coverage, $1,200-$2,000/month for family.
How long does COBRA last?
COBRA continuation coverage typically lasts 18 months after leaving a job. It can extend to 36 months in certain circumstances, such as the covered employee becoming eligible for Medicare or a dependent losing coverage due to divorce or death.
When should I choose COBRA over ACA?
COBRA makes sense when: you're mid-treatment and don't want to change providers, you've already met your deductible for the year, you're only between jobs for a short time (1-2 months), or your employer plan has better coverage than available ACA plans.
What is the COBRA election period?
You have 60 days from losing coverage (or receiving the COBRA notice, whichever is later) to elect COBRA. Coverage is retroactive to the date you lost coverage, so you can wait to see if you need care before electing - but you'll owe back premiums.
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