Who Really Pays for COBRA?

If you’ve ever lost a job, quit a job, or changed jobs, you know how important it can be to figure out your next step with health insurance. Going without health insurance is never a good idea, because medical bills could leave you deeply in debt and needing debt relief. 

COBRA insurance gives people a way to keep their old job’s health insurance after getting laid off or quitting. Once you understand who really pays for COBRA, you might want to choose another form of health insurance. 

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is the law that gives Americans the right to keep using the same health insurance that they had from their former employer. COBRA can be a good choice for some people and certain situations. But a lot of people have misunderstandings about just how expensive COBRA can be, and who really pays for COBRA. 

Here’s the thing about COBRA: Your (now former) employer doesn’t pay for it, and the government doesn’t pay for it. COBRA isn’t a government health insurance program like Medicare or Medicaid. 

You pay for COBRA.

Let’s take a closer look at the full costs of COBRA and what other choices you might have for health insurance after losing a job or leaving a job.  

COBRA Eligibility Requirements

Understanding who qualifies for COBRA coverage can be a bit complicated. COBRA is generally available with certain employers and in particular situations. If you qualify for COBRA, your employer or your insurance company will tell you. Knowing your rights could help you protect yourself and get the best choice for your health insurance, whether or not it’s COBRA. 

Here are a few key points about COBRA eligibility requirements.

Company size 

Employers with 20 or more employees must offer COBRA coverage. Even if you work for a small business with less than 20 employees, you may still be eligible for COBRA, depending on the state you live in. 

Mini-COBRA states

If you worked for a smaller company with fewer than 20 employees, you may still be able to continue your coverage through COBRA. More than 40 states and the District of Columbia have mini-COBRA laws, which extend health insurance continuation rights to employees of smaller companies (typically two to 19 employees) that don't qualify for federal COBRA. 

These states include California, Colorado, Connecticut, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York, and Texas, among many others. The specifics of each state's law, such as coverage duration and eligibility rules, can vary significantly.Qualifying events 

COBRA coverage is meant for people who go through certain big life events, including: quitting a job, getting your hours reduced at work, or job loss unless you’re terminated for gross misconduct. The term "gross misconduct" is not legally defined and courts have conflicting rulings. If an employer incorrectly denies COBRA, they can face significant penalties. 

You could also be eligible for COBRA if you receive health insurance through a family member, such as a spouse, and:

• You go through a divorce or legal separation 

• The employee dies 

• The employee becomes eligible for Medicare 

60-day timeline for choosing COBRA coverage 

If you want to enroll in COBRA coverage, you need to choose within a certain amount of time, and your employer also must notify you and others within a certain timeframe. After a job-related qualifying event (like leaving your job):

• Your employer should notify the health insurance company’s plan administrator within 30 days

• After receiving this notice, the plan administrator has 14 days to send you the COBRA election notice

• If your employer is also the plan administrator, it has 44 days from the termination date to send you the COBRA notice

You have 60 days to decide if you’ll continue your coverage through COBRA. Coverage through COBRA can be retroactive. You don’t have to decide right away.  

Not everyone’s life situation or personal finances will be right for COBRA. But after losing a job or going through other big life changes, you may have the option to use COBRA. This can let you keep your existing employer-backed health insurance if you qualify. 

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How COBRA Works

If you receive health insurance through your employer, you might not realize just how much your health insurance plan really costs. Many employers help pay for some of the costs of your health insurance premiums. And even though your employee portion of the monthly premiums gets deducted from your paycheck, it can be a somewhat veiled cost. 

Your health insurance company doesn’t make you write them a check every month. The costs are often shared between you and your employer, and you might never be aware of the employer’s part. For example, if your employer covers half of the premium costs and your monthly premium is $1,000, you might only notice $250 getting deducted from each of your twice-a-month paychecks—but the actual cost of that health insurance premium is $1,000.

If you leave your job, lose your job, or your hours get reduced to the point where you’re no longer eligible for benefits, you may suddenly have to find new health insurance coverage. COBRA insurance is one option for continuing your health insurance plan. The costs might shock you. 

Once you enroll in COBRA, you pay 100% of the premium plus an additional 2% for administrative costs. In our example above, you’ll pay $1,020 per month. 

COBRA premiums are much more expensive for families than for single people. Some employers have generous benefits that cover the full cost of premiums for the employee and the employee’s family members. 

Many people might not realize this, because it doesn’t show up on their take-home pay. When you look at the full sticker price for paying 102% of your family’s monthly premium all by yourself, without an employer chipping in, you might want to find different options for your health insurance.  

Also, COBRA coverage doesn’t last forever. Depending on your situation, you may be able to keep using COBRA insurance for 18 to 36 months. Here’s how long your COBRA health insurance coverage might last, based on the reason you qualify:

Generally, job-related reasons like losing your job or quitting your job give you less time with continuing health insurance than family-related reasons like a divorce or death. People who lose health insurance because of big life changes in their family are usually allowed some extra time to use COBRA, if they choose. 

If you live in one of the mini-COBRA states, the specific rules for coverage and eligibility vary. They typically cover the same qualifying events as federal COBRA and often extend coverage beyond the 18-month federal minimum. For example, New York grants up to 36 months of mini-COBRA coverage. Here are some durations for COBRA coverage and eligibility requirement in several mini-COBRA states:

• California: Cal-COBRA provides an extension of federal COBRA benefits up to 36 months. To be eligible, the person must have been eligible for COBRA after Jan. 1, 2003, and their employer's master health plan must be in California.

• Florida: Up to 18 months. The employee has 30 days after losing employer-sponsored insurance to notify the health insurer that they are eligible for continued coverage.

• Maryland: Up to 18 months. To be eligible, the person must have been a Maryland resident and covered for at least three months prior to the qualifying event.

• New York: Up to 36 months. If a person is eligible for federal COBRA, they can extend it up to 18 months after that coverage ends. Includes people who may be excluded under federal law, such as domestic partners or those terminated for gross misconduct.

• Texas: Up to nine months. If a person is eligible for federal COBRA, they can extend it up to 6 months after that coverage ends. To be eligible, a person must have had coverage for at least three months before the qualifying event and elect coverage within 60 days. 

The COBRA Loophole: What You Need to Know 

COBRA has a special feature that might make it helpful for lots of people, even if they don’t enroll in COBRA: the COBRA loophole. This loophole isn’t a secret trick. Just something you should know: you’ve got around two months to decide whether to enroll in COBRA coverage. COBRA coverage is retroactive for 60 days, back to the day that your employer health insurance ended. 

Let’s say you lose your job and your health insurance ends on January 1. You may have until early March (your employer will give you the exact deadline) to make your decision about COBRA coverage. You don’t have to pay COBRA premiums during this time. If you do choose COBRA, you’ll have to pay the full premiums for the 60-day retroactive period.

Even if you can’t afford COBRA, you could still use it as a back-up plan and safety net to help avoid financial hardship during those first 60 days. You don’t have to pay for COBRA immediately, and you don’t have to use COBRA at all if you can get through the next 60 days with no medical costs. If you choose not to enroll, before your COBRA 60-day election period ends you can start a new health insurance plan with a special enrollment period.

Using the COBRA loophole could make financial sense for a few situations. If you aren’t sure if you want to pay COBRA premiums, the COBRA loophole gives you 60 days to shop for different health insurance plans. 

That means if something happens—say you have a doctor visit, need a prescription, or even face an unexpected medical issue—you can still opt into COBRA later and have it cover those expenses. You’ll need to backpay the premiums for that coverage period, but you’ll have avoided paying up front just in case. And you’ll have health insurance coverage for your medical costs.

The COBRA loophole gives you an extra safety net and a way to buy time to research your health insurance options, without paying COBRA premiums upfront.  

Do Employers Ever Pay for COBRA?

Employers aren’t required to pay COBRA premiums. Typically, someone changes jobs or has another qualifying life event, and then the employee or their family members have to pay the full costs for the COBRA health insurance premiums.

There are a few situations when employers might choose to pay COBRA premiums or contribute part of the cost. 

Severance packages 

If you lose your job as part of a big layoff or if you’re a higher-level executive whose compensation package includes this benefit, some employers might include payment for COBRA premiums. Don’t expect this from every job, and the details could be widely different depending on the employer or circumstances of why you are leaving the company.   

Union agreements 

If you’re a member of a union and your union has negotiated this as part of your benefits package, some union employees might get help from the employer with paying COBRA premiums. This is also a rare situation, but check with your union if you think it might apply to you. Some unions also offer assistance with health insurance for members who lose their jobs. This is not necessarily the same as paying for COBRA premiums. 

How Much Does COBRA Usually Cost a Month?

Your human resources (HR) officer can tell you the exact cost of your COBRA premiums if you decide to continue coverage. To figure this out on your own, ask HR how much your employer contributes toward your monthly coverage. Then, check your pay stub to calculate how much you're contributing. 

Add these two figures together and add another 2% for the administrative fee.

Here are a few  examples of how much COBRA insurance might cost you. 

COBRA coverage for a single person 

Let’s say you’re a single person with a full-time job and the yearly cost of your health insurance premiums is $8,951, or. about $746 per month. Assuming your employer pays half the premium, you pay $373 per month for your health insurance from your paycheck.

Your company is going through some changes and decides to reduce your work hours. You no longer qualify for health insurance as a full-time employee. With COBRA coverage, you can keep using your employer health insurance—as long as you pay the full premium plus a 2% fee. 

Here’s how much COBRA would cost you per month: 

Full premium (employer contributions + your own) x 1.02

373 + 373 = 746

746 x 1.02 = 761

If you’re used to paying only $373 per month for health insurance, suddenly being asked to pay $761 might feel expensive. Be sure to compare your estimated COBRA costs with health insurance marketplace plans on HealthCare.gov or your state marketplace website. For example, in 2025, the average monthly premium for a Silver Tier health insurance marketplace plan is $497 for a 40-year-old. 

COBRA coverage for a family 

Let’s say you have family coverage from your employer at an annual cost of $25,572. Together, you and your employer pay $2,131 every month for your health insurance premiums. Let’s say that your employer pays 75% of that premium, or $1,598. Every month, you pay $533 for your family’s medical coverage.

Then you lose your job. If you want to keep your family’s current health plan by using COBRA, you must pay the entire $2,131 per month as well as the 2% administrative fee.

You decide to sign up for COBRA so you can continue to receive the same health coverage. Here’s what you’ll have to pay out-of-pocket.

2,131 + 1,598 = 2,131 x 1.02 

Now your total cost for health insurance under COBRA is $2,174 per month, not the $533 per month you’ve been paying. That’s a whopping 308% increase of $1,641 per month. And COBRA insurance can be especially hard to afford if you’re unemployed or earning less than you used to.

In some situations, COBRA insurance could be the best choice. If you have current medical needs and don’t want to interrupt treatment or switch doctors and you can afford to pay the premiums, COBRA could be preferable to finding the right new insurance policy on short notice. Exact premium amounts for COBRA vs. health insurance marketplace plans or other private insurance plans will depend on the state you live in and your age. Health insurance premiums tend to be higher for older adults. For most people, HealthCare.gov marketplace plans have lower-cost premiums that are better for your budget than COBRA. 

Another factor to consider is the deductible. If you have medical needs and you’ve hit your deductible (or are close to it), you might not want to enter into a new health insurance plan with a new deductible to reach before benefits fully kick in.  

Sometimes COBRA is worth paying for. Read the fine print on your COBRA insurance plan about deductibles, networks, and other plan benefits. If you and your family have certain doctors or clinics that are in-network with your COBRA insurance plan, it might be worth paying the extra COBRA costs until you get back on your feet financially. But many Americans don’t have big savings accounts or extra income to pay for COBRA. If you don’t have a well-funded emergency savings fund or if you’re already in need of debt relief from other medical bills or credit card debts, COBRA probably isn’t the best choice for your budget. Most people might want to look for alternatives.

What Happens If You Can't Afford COBRA?

If you feel like you can’t afford COBRA, don’t worry. Going from paying a small percentage, or even zero dollars per month, to paying 102% of your employer-based insurance premium can be a big change. It’s natural to feel some sticker shock about COBRA costs. 

If you already know that you can’t afford COBRA and you’re comfortable giving up your employer’s health insurance plan, that’s fine. You might want to choose a new health insurance plan with a lower-cost premium. Many plans on HealthCare.gov or state exchanges might give you a better deal than COBRA, especially if you qualify for a subsidy to make your premium more affordable. 

If you want to find a new health insurance plan, you must do this within 60 days of losing your job-based health insurance. Sixty days is the cutoff for a special enrollment period that lets you sign up for new insurance outside of annual open enrollment.  

If you enroll in COBRA and then find you can’t afford the premiums, your health insurance plan will terminate. You’ll be left without any health insurance, leaving you at risk of higher medical debt. You might not want to chance enrolling in COBRA if you’re not 100% sure you can afford the premiums—especially if it’s early in the year and you’re months away from the regular open enrollment period when you can switch plans. Think about finding a different plan with a premium that you can afford. 

Alternatives to COBRA

If you’d like to avoid the high cost of COBRA, consider the following choices: 

• Get added to a family member’s health insurance plan. If your spouse is employed and has access to a job-sponsored health insurance plan, find out if you can be added. Losing job-based health insurance is considered a qualifying event, which lets you enroll in a new plan even if it’s outside the annual open enrollment period. Contact the plan administrator at your spouse’s workplace and then fill out the forms. If you’re a young adult under age 26, you might be able to get added to your parents’ health insurance. 

If you want to put yourself on a family member’s plan, you’ll have 60 days from the time your former employer stops paying for your coverage.

• Check out HealthCare.gov. If you aren't eligible for a family member’s plan, go to HealthCare.gov or your state’s health insurance marketplace website to look for options for health insurance. Based on your income and the state you live in, you might qualify for lower-cost or free health insurance premiums. 

If you lose a job or lose job-based health insurance, you can use HealthCare.gov any time of year, not just during open enrollment. 

• Find out if you qualify for Medicaid. Often, Medicaid is a cost-effective way to obtain health insurance coverage if you’re eligible. And Medicaid isn't just for the lowest-income people. In the past few years, some states have expanded Medicaid coverage to some higher-earning households. Use HealthCare.gov to find out if you qualify for Medicaid. 

• Speak to an expert. The local help tool on Healthcare.gov can help you find an agent who’s trained to provide free impartial and accurate information. They're certified by the Marketplace to help you apply and enroll in any Marketplace health plan, Medicaid, or help with the Children's Health Insurance Program (CHIP) coverage for your family.

Why You Shouldn’t Go Without Health Insurance

Medical debt is one of the biggest causes of bankruptcy in the U.S. A single accident or illness could forever change your life and shatter whatever financial security you have. 

Since COBRA insurance is so expensive, you might be tempted to give up health insurance after losing a job. Don’t make this mistake. You still have options to get health insurance through HealthCare.gov or Medicaid. 

Even if your new health insurance plan is less generous than your former job-based plan, you can still go to the doctor, get prescriptions, and be protected from big hospital bills and medical debt. 

The Bigger Question Remains: Who Really Pays for COBRA?

The simple answer is that you pay for COBRA, all by yourself, as an individual person dealing directly with your insurance company. With COBRA, you no longer have the safety net of your employer chipping in money to cover the costs of your health insurance.

For most people, COBRA insurance has far more expensive premiums than the plans you could get on HealthCare.gov. But paying for COBRA can sometimes be the best choice, if it lets you keep seeing your current doctors or if it protects you from higher deductibles. Compare numbers between your COBRA insurance and your choices from HealthCare.gov and find out which is the best for your budget.   

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