COBRA Insurance
A federal law allowing workers to continue employer-sponsored health insurance after a qualifying event.
What is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that gives workers and their families the right to continue group health insurance coverage for a limited time after losing employer-sponsored coverage due to a qualifying event — such as job loss, reduced hours, divorce, or a dependent aging off a parent's plan. COBRA coverage is identical to the employer plan but is expensive: the individual pays the full premium (both employer and employee shares) plus a 2% administrative fee, which is typically 3–4 times what they previously paid. Coverage typically lasts 18 months for job loss, and up to 36 months for other qualifying events. COBRA prevents a coverage gap but is often more expensive than marketplace alternatives.
Example
An employee loses their job. Their employer was paying $600/month for their health insurance; the employee's payroll deduction was $150/month. Under COBRA, the former employee must pay the full $600 plus a 2% admin fee — approximately $612/month. Before enrolling, they should compare this to ACA marketplace plans, where a loss of job-based coverage qualifies for a special enrollment period and possibly premium subsidies.
Source: US Department of Labor — COBRA Continuation Coverage