COBRA lets you keep your employer’s group health coverage after you leave a job or lose eligibility, but you usually pay the whole premium yourself, plus up to a 2% administrative fee. Using average 2024 employer plan premiums from the federal Medical Expenditure Panel Survey, that works out to roughly $721 a month for single coverage and about $2,086 a month for family coverage.
That sticker shock is why it helps to understand exactly what you are paying for, how long it lasts and what your deadlines are. The rules below come from the U.S. Department of Labor’s employee guide to health continuation coverage.
Who qualifies for COBRA coverage?
Federal continuation coverage applies to group health plans of private-sector employers with 20 or more employees, and to state and local government plans. You, your covered spouse and your covered dependent children can qualify after a “qualifying event,” such as:
- Losing your job for any reason other than gross misconduct
- A cut in hours that ends your eligibility
- Divorce or legal separation from the covered employee
- The covered employee’s death or Medicare entitlement
- A child aging out of dependent status under the plan
If your employer has fewer than 20 employees, federal rules may not apply, but many states have “mini-COBRA” laws that offer similar continuation rights. Check with your state insurance department.
How much does COBRA cost each month?
The plan can charge up to 102% of the total cost of coverage, meaning the employee and employer shares combined plus a 2% administrative charge. While you were working, your employer likely paid most of the premium, so the jump can be large.
A worked example using the MEPS Insurance Component figures for 2024 private-sector plans:
- Single coverage: $8,486 a year ÷ 12 = $707.17 a month; × 1.02 = $721.31 a month
- Family coverage: $24,540 a year ÷ 12 = $2,045.00 a month; × 1.02 = $2,085.90 a month
Your own plan may cost more or less. Your election notice lists the exact amount. If you qualify for the 11-month disability extension, the plan can charge up to 150% of the cost for those extra months.
How long does COBRA coverage last?
- 18 months for job loss or reduced hours
- 29 months if a qualified beneficiary is disabled and meets the notice rules for the extension
- 36 months for spouses and dependents after divorce, the employee’s death, Medicare entitlement or a child losing dependent status
Coverage can end early if premiums are not paid on time, the employer stops offering any group health plan, or you become covered under another group plan.
What are the deadlines to elect and pay?
Timing is where people get tripped up:
- Election: you have at least 60 days from the later of the date coverage would end or the date you receive the election notice.
- First payment: due no later than 45 days after you elect.
- Later payments: each monthly premium has a grace period of at least 30 days.
Coverage is retroactive. If you elect within the window and pay the first premium on time, your coverage reaches back to the day your old coverage ended. Some people wait to see whether they need care, but they still owe premiums for every month back to the start if they elect.
Is COBRA cheaper than a Marketplace plan?
Often not. Losing job-based coverage triggers a Special Enrollment Period in the Health Insurance Marketplace, generally 60 days from the loss of coverage, and you may qualify for premium tax credits based on your expected income for the year. COBRA has no subsidy. On the other hand, it keeps your current doctors, network and the deductible you have already met this year, which can matter if you are mid-treatment.
Compare total yearly cost, not only premiums. Add the premium to the deductible and out-of-pocket maximum you might realistically hit, then do the same for a Marketplace plan.
How do you budget for COBRA after a layoff?
Lay out your income and your new premium side by side. If you received severance or a final paycheck, the severance pay calculator and the final paycheck calculator show what you will actually take home. Then estimate your premium with the COBRA cost calculator and fit it into a monthly plan with the budget calculator.
Example: a single person with 3 months of severance whose plan charges $721.31 a month will spend $2,163.93 to cover that period. If that person expects to start a new job with coverage in month four, continuation coverage may be the simplest bridge.
What should you do when you get the election notice?
- Write down the election deadline and the first-payment deadline.
- Confirm the monthly amount and who is covered.
- Price a Marketplace plan for comparison during the same window.
- Keep proof of every payment.
- Tell the plan administrator promptly about a disability determination or second qualifying event, since extensions have their own notice deadlines.
If you think your employer or plan did not give you the notice they should have, the Department of Labor’s Employee Benefits Security Administration can help.
Can you drop COBRA once you find new coverage?
Yes. You can stop paying COBRA premiums at any time, and coverage ends at the close of the last paid period. Before you cancel, make sure the new plan’s start date is confirmed so you do not leave a gap. If a new employer’s plan has a waiting period, keep paying until the first day the new coverage takes effect. Also check whether the new plan covers a treatment or prescription you are in the middle of; if not, overlapping for a month may be worth the cost. Keep the cancellation confirmation in writing.
Sources
- U.S. Department of Labor: An Employee’s Guide to Health Benefits Under COBRA
- AHRQ: MEPS Insurance Component table series (2024 premiums)
- HealthCare.gov: Health coverage options if you’re unemployed
FAQ
What does “How Much Does COBRA Insurance Cost After Leaving a Job?” explain?
COBRA lets you keep your employer’s group health coverage after you leave a job or lose eligibility, but you usually pay the whole premium yourself, plus up to a 2% administrative fee. Using average 2024 employer plan p…
How should I use this guide with a calculator?
Read the definitions and assumptions first, then open the linked calculator with the same inputs. Treat results as estimates, not professional advice.
Is this financial or medical advice?
No. Calcenzo content is educational. Confirm important decisions with a qualified professional and official sources for your situation.