How does COBRA insurance work

When you lose employer-sponsored health coverage due to a job change or other qualifying event, COBRA offers a way to temporarily continue your same group health plan. Understanding how it works—who’s eligible, how it’s priced, and how long it lasts—helps you decide if it’s the right move for your situation.

Quick Definition

COBRA is a federal law allowing eligible employees and dependents to keep their employer’s group health plan for a limited time after losing coverage—while shouldering the full premium.

How COBRA Works in Practice

1. Qualifying Events & Eligibility

You may qualify if you, your spouse or dependents lose coverage because of certain events: job loss, reduced hours, divorce, death of the covered employee, or aging out as a dependent. Your employer’s plan must be covered by COBRA rules (typically private employers with 20+ employees).

2. Election & Timing

When a qualifying event occurs, your employer or plan administrator must notify you of your right to elect COBRA continuation. You then normally have up to 60 days from the notice or loss of coverage to decide. Once elected, coverage is generally retroactive to the date you would’ve lost it so you avoid gaps.

3. Coverage & Cost

Under COBRA, you typically must pay the full cost of the health plan (your portion + any employer portion) plus sometimes a small administrative fee—often up to 2 %. Because you’re covering what the employer used to pay, the premium can be significantly higher than what you paid while employed.

4. Duration of Coverage

COBRA coverage is temporary. For most events, the maximum is about 18 months. Under certain circumstances (such as disability or second qualifying event) it can be extended to 29 or 36 months. After it ends, you’ll need to switch to a different health plan.

5. Alternatives

Because COBRA can be expensive, it’s smart to compare it with other options: joining a spouse’s employer plan, enrolling in a Marketplace plan under special enrollment, or qualifying for Medicaid. Evaluate cost, benefits and whether the provider network meets your needs.

Why It’s Important

• Maintains your existing plan—so you can keep the same doctors and benefits that you had before the job change.

• Prevents gaps in coverage which could lead to denied claims or higher costs.

• Gives you time to transition to a new health plan while still being covered.

FAQs

Q1. If I’m eligible, do I have to elect COBRA?
No—you have the right to choose it, but you’re not required. Declining COBRA means you might enroll elsewhere.

Q2. Does the employer continue paying its share under COBRA?
Usually not. Under COBRA you pay what the employer + employee combined paid, plus any admin fee—so your premium goes up.

Q3. Can I stop COBRA early?
Yes—if you find alternative coverage or if you miss a payment. But stopping it may trigger a special enrollment or gap risk.

Q4. Do I have the same benefits under COBRA?
Yes—you remain in the same group health plan with the same benefits, network and rules as before the qualifying event.

Q5. Is COBRA always the best choice?
Not always. Because of high cost, other options may be more affordable or flexible—especially if you qualify for subsidies or a spouse’s plan.

Final Thoughts

COBRA gives you a valuable bridge when you lose employer health coverage — you continue your same plan for a limited time, but at a higher cost and without employer subsidy. It’s ideal if you want to keep your provider network or need uninterrupted coverage—but because of premium cost and time limits, it’s essential to weigh alternatives.

Not sure if COBRA is right for you or interested in exploring better alternatives? Fill out the form below to receive personalized guidance and quotes from experienced insurance professionals—let us help you make the best decision for your coverage and budget.