COBRA Insurance: Keeping Health Coverage After Job Loss

COBRA insurance is a federal right to keep the exact same health plan you had through your job for a limited time after you lose it, at your own expense. It is not a separate plan and not free coverage. The Consolidated Omnibus Budget Reconciliation Act of 1985 created it, and it generally covers workers at private employers with 20 or more employees, plus employees of state and local governments. Federal workers and church plans sit outside it.

What is COBRA insurance?

The continuation coverage rule inside COBRA says that if you lose your job-based group health plan, the plan has to let you stay on it, with the same doctors and network, for a set number of months. You are not buying a new policy. You are paying to remain in the plan you already had. Under the Department of Labor's COBRA overview, once you elect COBRA you pay the full premium yourself, plus a small administrative fee.

The Department of Labor's Employee Benefits Security Administration handles private-sector COBRA questions and complaints. If your former employer has fewer than 20 employees, federal COBRA does not apply, but many states run their own continuation laws for smaller employers, often called mini-COBRA. Those state laws differ in who they cover and how long coverage runs, so ask your state insurance department if your employer is small.

Who has to offer COBRA coverage?

The employer-size rule is written as an exemption. Under 29 U.S.C. 1161, the continuation requirement does not apply to a group health plan for a calendar year if all employers maintaining the plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year. In plainer terms, employers with 20 or more employees in the prior year generally have to offer it. What matters is that prior year, not the headcount on the day you walked out.

State and local government plans are covered instead through 42 U.S.C. 300bb-1, part of the Public Health Service Act, which CMS administers. Other employers sit outside COBRA completely. The CMS fact sheet on COBRA lists plans sponsored by certain church-related organizations, by the District of Columbia government, by territorial governments, or by the federal government. Federal employees have their own program, Temporary Continuation of Coverage, described on the Office of Personnel Management's TCC page.

What counts as a qualifying event?

A qualifying event is the specific thing that triggers your right to elect COBRA. For an active employee, 29 U.S.C. 1163 lists two triggers: termination of employment for any reason other than gross misconduct, and a reduction in hours that drops you below the plan's eligibility line. If you are weighing whether to quit your job on the spot, know that quitting still counts as a qualifying event in almost every case, since only gross misconduct removes the right. The statute never defines gross misconduct and gives no list of examples, so plans and courts decide it case by case.

Spouses and dependent children can lose coverage, and gain a COBRA right, through four other events in that same section: divorce or legal separation from the covered employee, the covered employee's death, the covered employee becoming entitled to Medicare, or a dependent child aging out or otherwise losing dependent status under the plan's rules. A sixth listed event covers retirees when the former employer files bankruptcy.

Who counts as a qualified beneficiary?

A qualified beneficiary is anyone entitled to elect COBRA on their own. That includes the covered employee, the employee's spouse, a dependent child covered under the plan the day before the qualifying event, and a child born to or placed for adoption with the employee while COBRA is already running. That last category carries the same rights as the others once you enroll the child and pay the added premium.

Each qualified beneficiary has an independent right to elect coverage. The Department of Labor puts it plainly on its COBRA law page: spouses and children may enroll in COBRA even if the former employee does not. A divorced spouse keeps that right after the marriage ends, but someone has to tell the plan about the divorce within 60 days, because the employer does not report that event.

How long does COBRA last?

The length depends on which qualifying event started the clock. 29 U.S.C. 1162 sets the main periods.

• Eighteen months, for termination of employment or a reduction in hours.
• Twenty-nine months, if a qualified beneficiary is determined disabled under Social Security rules at any point during the first 60 days of COBRA and the plan gets notice of that determination in time.
• Thirty-six months, for divorce, legal separation, the employee's death, the employee's Medicare entitlement, or a child losing dependent status.
• Thirty-six months counted from the first event, when a second qualifying event such as a divorce or the employee's death hits a spouse or child during the original 18 months.

A separate rule protects families around age 65. If the employee became entitled to Medicare and then lost the job or had hours cut less than 18 months later, the spouse and dependent children can stay on COBRA until 36 months after the Medicare entitlement date, even when the employee's own period ends sooner.

The disability extension has unforgiving paperwork, set out in 29 U.S.C. 1166. The Social Security Administration has to date the disability inside the first 60 days of COBRA. The plan then has to receive that determination within 60 days after the date it was issued, and before the 18-month period closes. Miss either deadline and coverage is capped at 18 months. If a disability also affects your ability to work, our guide on disability accommodations and FMLA covers a separate but related set of rights.

How much does COBRA cost?

Plans can charge up to 102 percent of what the coverage actually costs the plan: your old premium share plus your employer's old share, with a 2 percent administrative fee on top. During the extra 11 months of the disability extension, months 19 through 29, the cap rises to 150 percent of the full cost.

If you are owed severance, ask whether it includes employer-paid COBRA premiums; some packages do, though federal law does not require it. Our article on severance pay entitlement explains when you have a legal claim. Some employers also deduct a final insurance premium from your last check; if a deduction looks wrong, see our piece on final paycheck withholding rules.

COBRA deadlines at a glance

Every step runs on a strict clock, and missing one can cost you the whole right. The core deadlines come from 29 U.S.C. 1165 and section 1166.

Step	Who acts	Deadline
Notify the plan of a job loss or reduced hours	Employer	30 days after the event
Notify the plan of a divorce or a child losing dependent status	You or another qualified beneficiary	60 days after the event
Send the COBRA election notice	Plan administrator	14 days after being notified
Elect COBRA coverage	You	60 days from the later of the notice date or the date coverage ended
Make the first premium payment	You	45 days after you elect
Pay each later monthly premium	You	30-day grace period after each due date
Choose a Marketplace plan instead	You	60 days from losing job-based coverage

Coverage is retroactive once you elect and pay. If you elect in week seven, the plan treats you as covered back to the day your job-based coverage ended, including any claims filed in between.

When COBRA coverage can end early, and what comes next

COBRA does not always run for the full period the qualifying event allows. A plan can cut it off sooner:

• You miss a premium payment and the 30-day grace period passes without payment.
• Your former employer stops offering any group health plan to any employee.
• You become covered under another group health plan after you already elected COBRA.
• You become entitled to Medicare after you already elected COBRA, or you commit fraud that would end coverage for an active employee too.

Losing job-based coverage also opens a 60-day special enrollment window on the Marketplace at healthcare.gov's COBRA coverage page, and subsidies can make that plan cheaper than COBRA for the same months. What you cannot do is elect COBRA and then drop it voluntarily months later and expect a new Marketplace window; healthcare.gov says choosing to stop paying COBRA premiums on your own does not qualify. When COBRA coverage ends on its own, a fresh 60-day special enrollment period opens.

If you are close to 65, treat COBRA and Medicare as two separate clocks. Medicare.gov's page on when Medicare coverage starts says COBRA is not considered group health plan coverage and that getting COBRA does not change when the Part B special enrollment period ends. You have up to eight months after you stop working, or after your health insurance ends if that comes first, to sign up for Part B without a penalty. Medicare.gov's COBRA page adds that if you are eligible for Medicare and not enrolled, COBRA may pay only a small portion of the care you get. Waiting for COBRA to run out before signing up for Part B is a common and expensive mistake.

What to do if you just lost job-based coverage

1. Watch for the election notice. The plan administrator has 14 days from being told about your qualifying event to send it. If two or three weeks pass with nothing, call HR and ask for it in writing.
2. Compare the COBRA premium quoted on your notice against a Marketplace plan at healthcare.gov. You have only 60 days either way, so price both before the clock forces a decision.
3. If you were let go and are also filing for unemployment, keep that process separate from your COBRA decision; our guide on unemployment after being fired covers eligibility rules that do not depend on your health coverage choice.
4. Elect within 60 days of the notice date or your coverage end date, whichever is later, even if you cannot pay yet.
5. Pay your first premium within 45 days of electing. Mark every following due date on a calendar, since you only get a 30-day grace period after that.
6. If you are near 65, contact the Social Security Administration about Part B before your COBRA ends, not after.
7. Keep copies of every notice and payment receipt. If a plan misses its own deadlines or wrongly denies your election, you can contact the Department of Labor's Employee Benefits Security Administration, which handles private-sector COBRA complaints.

This is general information, not legal advice. COBRA rules change, and mini-COBRA laws vary by state, so confirm current details with the official sources linked above or a licensed attorney in your state.

The law behind your rights at work

Most workplace rights come from federal statutes enforced by the U.S. Department of Labor and the EEOC, with many states adding stronger protections.

Key federal laws:

• Fair Labor Standards Act (FLSA), 29 U.S.C. ch. 8
• Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.

Where to get help or file a complaint:

• U.S. Department of Labor, Wage and Hour Division
• U.S. Equal Employment Opportunity Commission (EEOC) — file a charge

Your state and city matter. Federal law is the floor — many states and cities require higher pay, more leave, and broader protections. Always check your state’s rules (and any local ordinances) in addition to the federal laws above. This is general legal information, not legal advice.