How Does COBRA work? Continuation of Your Health Coverage

Janet Berry-Johnson
Janet Berry-Johnson
  • 8+ years writing about insurance, taxes, and personal finance

  • Certified public accountant

Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.

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Danny Smith
Edited byDanny Smith
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Danny SmithHome and Pet Insurance Editor
  • P&C license candidate in Massachusetts

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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Updated January 20, 2023 at 11:00 AM PST

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Are you in the process of transitioning out of a job, voluntarily or otherwise, and unsure whether you can keep your health insurance? You’re not alone. This is a very common question that people have when it comes to employment changes. Fortunately, COBRA can help you keep your coverage for a certain period after leaving a job. Below, we’ll break down everything you need to know about COBRA so you can keep your health insurance if you become unemployed.

Quick Facts
  • COBRA stands for Consolidated Omnibus Budget Reconciliation Act.

  • COBRA allows employees who lose health benefits to temporarily retain their coverage.

  • The employee, rather than the employer, usually pays the full cost of COBRA premiums.

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows employees and their families to temporarily keep their health insurance coverage after a job loss or similar times of transition.[1] This includes if an employee is fired from their job, experiences a reduction in hours, passes away, or gets divorced or legally separated from their spouse.

It’s important to note that COBRA is not a type of insurance, but rather a law that requires employers to offer an extension of their existing group health plan, enabling qualifying people to continue receiving benefits for up to 18 months (or longer in some instances).

Learn More: Do I Need Health Insurance Coverage?

How does COBRA work?

Under COBRA, certain employers must offer an extension of their existing group health plan to employees who would otherwise lose coverage, allowing those who qualify to continue receiving benefits. These events typically consist of employee termination and resignation, though there are other qualifying events.

The law doesn’t apply to companies with fewer than 20 employees, the federal government, churches, and some church-related organizations. To take advantage of COBRA, you must be a qualified beneficiary and have a qualifying event.

  • Qualified beneficiary: A qualified beneficiary is someone who was covered under the group health plan on the day before a qualifying event. It also includes the employee’s spouse, former spouse, or dependent child.

  • Qualifying event: For employees, qualifying events include losing your job for any reason other than “gross misconduct” or losing benefits because of a reduction in your hours. For spouses and dependent children, qualifying events include the above circumstances, as well as the employee becoming eligible for Medicare, divorce or legal separation, or the death of the employee.

Once a qualifying event occurs, your employer generally has 30 days to notify the group health plan provider. However, if the qualifying event is a divorce, legal separation, or a child losing dependent status, it’s up to the employee, spouse, or dependent to notify the plan provider.

Once notified, the plan provider has 14 days to send a COBRA election notice informing you of your right to continue coverage and explaining how to keep your health insurance.

You then have 60 days from the election notice to decide whether you want to keep your coverage. If you elect to continue your health insurance through COBRA, coverage is available for either 18 or 36 months.

If you lost your benefits because you lost your job or experienced a reduction in working hours, you’re eligible for 18 months of coverage. You’re eligible for up to 36 months of coverage for all other qualifying events.[2]

Some states have longer COBRA timelines than what is provided by federal law. For example, employees in California can extend their health insurance coverage for an additional 18 months after their federal protection runs out under the state’s Cal-COBRA law. It also extends COBRA protections for employees of companies with two to 19 employees.[3]

Helpful Tip:

Check with your state’s Department of Insurance or Labor to find out if any additional protection is available in your area.

Coverage under COBRA is identical to the coverage available under your group health plan while you were employed. However, COBRA applies only to group health, dental, and vision insurance. No federal law requires employers to make other types of insurance — such as life or disability insurance — available after you lose your benefits.[4]

Check Out: What’s a High-Deductible Health Plan and How Does It Work?

How much does COBRA cost?

If you decide to keep your health insurance coverage through COBRA, you’ll most likely need to pay the full premium. While some employers can choose to subsidize the cost of your policy like they did while you were an active employee, they’re not required to do so.

The cost of COBRA depends on your particular plan. The average annual health insurance premiums are $7,911 for single coverage and $22,463 for family coverage, according to the Kaiser Family Foundation.[5] When you’re working, your employer pays the larger portion of the total cost of your health insurance. But on COBRA, you’ll be responsible for paying the entire premium.

You can estimate how much you might have to pay by adding your current out-of-pocket health insurance costs to the amount that your employer pays monthly. Otherwise, the employer will provide the exact monthly cost on the COBRA election notice. Just keep in mind that this amount can increase each calendar year.

In any event, the employer can’t charge more than the full cost of coverage plus a 2% administration charge.

You also may be able to offset some of those costs with a tax deduction if your total out-of-pocket medical and dental expenses — including your COBRA premiums — exceed 7.5% of your adjusted gross income for the year. Claiming those expenses can help lower your taxable income. Just make sure you itemize your deductions on your tax return instead of using the standard deduction.[6]

Read More: Are Health Insurance Premiums Tax-Deductible?

Applying for COBRA coverage

Signing up for COBRA coverage is straightforward. Once you receive the COBRA election notice, follow the instructions included in the notice to sign up for COBRA within 60 days. You may be able to enroll online or via mail. Contact your former employer’s benefits department if you don’t receive the election notice.

Alternatives to COBRA

Several other types of health insurance are available for people who have recently lost their job or have reduced hours. If COBRA coverage is unaffordable, shopping around is a good way to find a lower-cost alternative.

  • Health insurance marketplace: Applying for coverage through the health insurance marketplace at is a straightforward process and can help you find a plan that meets your needs and budget. You can compare plans and choose one that best meets your needs, as well as determine your eligibility for federal subsidies or premium assistance.

  • Private market: You can also purchase health insurance directly from an insurance company on the open market. Individual plans offer similar coverage to group plans but often charge higher premiums.

  • Spouse’s or parent’s plan: Another option is to get health insurance through your spouse’s employer-sponsored plan. Or, if you’re under the age of 26, you may be able to get coverage through your parent’s plan.[7]

  • Children’s Health Insurance Program (CHIP): CHIP provides low-cost health insurance coverage to children in families that earn too much money to qualify for Medicaid but can’t afford insurance elsewhere. Pregnant women are even covered by CHIP in some states.[8]


Here are answers to some commonly asked questions about COBRA.

  • Can you get COBRA if you quit your job?

    Yes, you can get COBRA if you quit your job.

  • Is paying for COBRA worth it?

    Paying for COBRA can be difficult, as premiums can be significantly more expensive than other alternatives. However, many benefits make COBRA worth considering.

    COBRA lets you continue your existing coverage, so you don’t have to worry about losing certain coverages or finding a new doctor. Additionally, it can provide a bridge of coverage if you’re between jobs and unable to purchase another policy immediately.

    Ultimately, you should base the decision to purchase coverage through COBRA on your needs and financial situation. Be sure to research all available options before making a decision.

  • Can you start or stop COBRA coverage at any time?

    You must enroll in COBRA within 60 days from your qualifying event or when your COBRA election notice is mailed. If you don’t enroll within that window, you may lose the option to enroll.

    Once you enroll, you can continue your existing health coverage for up to 18 or 36 months, depending on the qualifying event. However, you can cancel your insurance policy anytime if you find another job or get benefits elsewhere.

  • How does retroactive COBRA coverage work?

    COBRA is always retroactive to the day after your employer-sponsored coverage ends.[9] So even if you wait 60 days to enroll, you’ll be retroactively covered during the interim period.

    To receive retroactive COBRA benefits, you may need to submit any medical bills incurred before enrolling in the program. Additionally, you’ll be required to pay premiums for all months covered by the retroactive coverage.

  • Does COBRA coverage kick in immediately?

    No, COBRA coverage doesn’t start until you enroll in the program. After enrolling in COBRA, you’ll be covered retroactively starting on the day after your employer-sponsored coverage ended.


  1. U.S. Department of Labor - Employee Benefits Security Administration. "FAQs on COBRA Continuation Health Coverage for Employers and Advisers." Accessed January 18, 2023
  2. U.S. Department of Labor - Employee Benefits Security Administration. "An Employer's Guide to Group Health Continuation Coverage Under COBRA." Accessed January 18, 2023
  3. California Department of Managed Health Care. "Keep Your Health Coverage (COBRA)." Accessed January 18, 2023
  4. Society for Human Resource Management. "What benefits are covered under COBRA?." Accessed January 18, 2023
  5. Kaiser Family Foundation. "2022 Employer Health Benefits Survey." Accessed January 18, 2023
  6. Internal Revenue Service. "Topic No. 502 Medical and Dental Expenses." Accessed January 18, 2023
  7. U.S. Department of Labor - Employee Benefits Security Administration. "Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families FAQs." Accessed January 18, 2023
  8. "The Children's Health Insurance Program (CHIP)." Accessed January 18, 2023
  9. Centers for Medicare & Medicaid Services. "Understanding COBRA." Accessed January 18, 2023
Janet Berry-Johnson
Janet Berry-Johnson

Janet Berry-Johnson, CPA is a freelance writer with a background in accounting and income tax planning and preparation. She's passionate about making complicated financial topics accessible to readers. She lives in Omaha, Nebraska with her husband and son and their rescue dog, Dexter. Visit her website at

Danny Smith
Edited byDanny SmithHome and Pet Insurance Editor
Photo of an Insurify author
Danny SmithHome and Pet Insurance Editor
  • P&C license candidate in Massachusetts

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

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