What is COBRA insurance and how does it work?

Asked by: Mr. Friedrich Weissnat I | Last update: October 14, 2025

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The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, ...

How long can you get a COBRA after you quit your job?

COBRA coverage lets you pay to stay on your job-based health insurance for a limited time after your job ends (usually 18 months). You usually pay the full premium yourself, plus a small administrative fee.

How much does COBRA typically cost per month?

COBRA coverage is not cheap.

A COBRA premium can cost on average $400 to $700 a month per person.

What are the rules for COBRA coverage?

COBRA eligibility has three basic requirements that must be met for you to get a continuation of coverage:

Your group health plan must be covered by COBRA.
A qualifying event must occur.
You must be a qualified beneficiary for that event.

Is it better to use COBRA or obamacare?

ACA plans may offer significant cost savings through subsidies that aren't available under COBRA. By transitioning to an ACA plan, you can often find more affordable coverage without waiting until COBRA expires, giving you flexibility in managing your healthcare costs.

COBRA Insurance | What You Need to Know

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Does cobra insurance start immediately?

Assuming one pays all required premiums, COBRA coverage starts on the date of the qualifying event, and the length of the period of COBRA coverage will depend on the type of qualifying event which caused the qualified beneficiary to lose group health plan coverage.

Is COBRA ever worth it?

“If you're close to meeting your deductible on your current insurance plan and you have high health care costs, it may be worth it to temporarily stay on your COBRA plan,” explains Donovan. The same holds true if you're far into your employer plan's year and have already met your deductible.

Is COBRA a one time payment?

If you get COBRA, you must pay for the entire premium, including any portion that your employer may have paid in the past. This means your payment is often more expensive than what you paid as an employee. You can collect COBRA benefits for up to 18 months. This may be extended to 36 months under certain circumstances.

What is the COBRA loophole?

If you decide to enroll in COBRA health insurance, your coverage will be retroactive, meaning it will apply to any medical bills incurred during the 60-day decision period. This loophole can save you money by avoiding premium payments unless you actually need care during this time.

What is the best health insurance for unemployed people?

The best health insurance for unemployed individuals depends on your specific needs and financial situation. Medicaid offers health coverage for those with little to no income. For others, the Health Insurance Marketplace may provide affordable plans, especially for those eligible for financial help to lower costs.

Does health insurance end the day you quit?

When does health insurance expire after leaving a job in California? Your health insurance may expire the day you leave your job, or at the end of that month. For instance, if you quit on January 10^th, you may have coverage through January 31^st. You'll need to find out what your employer's policy is.

What is the largest disadvantage of COBRA?

Limited coverage duration:

One of the significant drawbacks of COBRA is its limited coverage duration. Typically, COBRA allows individuals to retain their employer-provided health insurance for up to 18 months after leaving their job or experiencing a qualifying event.

How do I calculate my COBRA payment?

Using the information provided in Box 12 of your most recent W-2 form, labeled Code DD, you will find the total annual cost of your employer-sponsored health coverage. To determine your monthly COBRA premium, divide this annual amount by 12 and include any applicable administrative fees, which may be up to 2%.

Does COBRA affect your taxes?

There isn't necessarily a “COBRA Tax Deduction”. You can only deduct the amount of COBRA medical expenses on your federal income tax in excess of 7.5% of your Adjusted Gross Income and then only if you itemize deductions.

What is the best HealthCare insurance?

Investopedia's analysis ranks Kaiser Permanente as the best health insurance company for 2025 because of its blend of affordability and low customer complaints. UnitedHealthcare and Aetna also earned top marks. We evaluated nine insurers using dozens of criteria, such as customer satisfaction, plan types, and costs.

What is the difference between a PPO and a HMO?

HMOs (health maintenance organizations) are typically cheaper than PPOs, but they tend to have smaller networks. You need to see your primary care physician before getting a referral to a specialist. PPOs (preferred provider organizations) are usually more expensive.

Is there a better option than COBRA?

Marketplace insurance, available through the Affordable Care Act, often offers more affordable premiums than COBRA. The cost difference can vary based on the chosen plan, location, and income, as subsidies may reduce premiums for marketplace plans.

What is the monthly cost of COBRA?

The average monthly cost of COBRA Insurance premiums ranges from $400 to $700 per individual.

What are the disadvantages of COBRA coverage?

COBRA cons

COBRA can be expensive, especially compared to the premiums you were paying before your qualifying event. ...
COBRA does not apply to all employer-sponsored health plans—in particular, those organizations with fewer than 20 employees may have no requirements. ...
Even if you get an extension, COBRA is only temporary.

Who is not eligible for COBRA coverage?

Why would an employee not qualify to enroll in Cal-COBRA? The employee is enrolled in or eligible for Medicare. The employee does not enroll within 60 days of receiving the notice of eligibility from the employer. The employee is covered by another health plan.

Is COBRA cheaper than marketplace?

Not only are Marketplace plans less expensive than COBRA, 80% of people will usually qualify for financial help from the government (called a subsidy) to help pay their premium.

Can I go to the doctor while waiting for a COBRA?

You will be reimbursed for any medical bills that you pay out-of-pocket during this period. Contact the plan administrator for more information on filing a claim for benefits. Complete plan rules are available from the employer's benefits offices.