COBRA Health Insurance, or the Consolidated Omnibus Budget Reconciliation Act, refers to insurance provided to an employee after they are no longer eligible to maintain employer-sponsored coverage. COBRA allows qualified workers to keep their group health insurance plans for a set amount of time after their eligibility changes.
The continuation of health coverage through COBRA is a federally overseen program. Qualified individuals may be able to maintain their coverage after no longer receiving benefits through their employer plan but may be required to pay coverage costs up to 102% of the cost of the plan.
COBRA is not inexpensive, but it enables employees to maintain the same coverage and doctors until they can find health insurance through another provider, such as through a new employer or through a private health insurance company.
Under COBRA, an employer with 20 or more employees who offers a group health plan to them must provide access to COBRA benefits, an extension of coverage.
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How Does COBRA Work?
Under COBRA health insurance, an employee can continue to receive coverage if they have a group health insurance plan through their employer but, for an eligible reason, lose coverage, such as being laid off from their job. The employee maintains costs associated with the entire plan, which can be 102% of the current costs their employer pays.
Is Every Employer Required to Provide COBRA?
According to the Department of Labor, COBRA Health Insurance applies to all employers with more than 20 employees “on more than 50 percent of its typical business days in the last calendar year.” Both full- and part-time employees are counted in regard to whether a plan is subjected to COBRA insurance costs in 2022. Plans sponsored by the federal government or by religious organizations do not apply for COBRA.
How to Get COBRA Insurance
Obtaining COBRA Health Insurance is broken down into three parts. You have plans, qualified beneficiaries, and qualifying events. The program establishes specific criteria for each element.
According to COBRA insurance rules, a qualified beneficiary is someone who is covered by a group health plan before a qualifying event occurs. This could be an employee, an employee’s spouse, or an employee’s dependent child. Occasionally, a retired employee, a retired employee’s spouse, or a retired employee’s dependent children can become qualified beneficiaries.
A qualifying event is an event that leads to an individual losing their health coverage. There are several types of qualifying events. Each type of event determines who the qualified beneficiaries are and how long they will be covered through COBRA.
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Who Are Candidates for COBRA Health Insurance?
Candidates for COBRA Health Insurance include:
Employees
To qualify for COBRA Health Insurance, you must meet the following criteria:
- Voluntary or involuntary termination of employment that does not involve misconduct
- Reduction in the number of hours, which disqualifies the employee from health coverage
Spouses
A spouse can qualify for COBRA Health Insurance according to the following criteria:
- Voluntary or involuntary termination of the covered employee’s employment for any reason besides gross misconduct
- Reduction in the hours worked by the covered employee below plan eligibility requirements
- Covered employees becoming entitled to Medicare
- Divorce or legal separation of the covered employee
- Death of the covered employee
Dependent Children
Dependent children are eligible under COBRA insurance rules under these guidelines:
- Loss of dependent child status under the plan rules
- Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
- Reduction in the hours worked by the covered employee below plan eligibility requirements
- Covered employees becoming entitled to Medicare
- Divorce or legal separation of the covered employee
- Death of the covered employee
How does COBRA Insurance work if I quit my job?
Regardless of the situation – whether you quit your job or your employment is terminated – you have the option to sign up for coverage.
Guaranteed Benefits With COBRA
Under COBRA Health Insurance, qualified beneficiaries will be offered identical coverage to what is available for similarly situated beneficiaries. Any change in benefits to the program for active employees will change your COBRA coverage. As such, eligible recipients must be given the opportunity to make the same choices, just like the non-COBRA beneficiaries of the plan are given, such as open enrollment periods.
Pros and Cons of COBRA Coverage
Pros: When you opt-in for COBRA, not only do you retain coverage for preexisting conditions and regular prescriptions, but you can also continue seeing your physician and medical network providers. It is possible for its cost to be lower than other standard policies on the market, and it is much better than staying uninsured.
Other benefits of COBRA Coverage include:
- Shields you from sudden life changes
- Gives coverage for you and your loved ones
- Same plan, filing process, and coverage
Cons: If you must pay all of the insurance coverage, COBRA can be quite expensive. Another disadvantage is you are dependent on your past employer for your insurance coverage. For example, if they opt to discontinue the plan, ex-employers and their beneficiaries will no longer have access to COBRA.
If your employer does change their health insurance plan, all COBRA recipients must accept the modifications, even if it doesn’t meet their needs.
Other cons of COBRA Coverage include:
- Set amount of time for coverage
- Hefty costs
- COBRA might not be available to you if you worked for a small company
How Much Does COBRA Insurance Cost in 2025?
The cost of maintaining your COBRA health insurance is dependent on the cost paid by your employer for your coverage during your work history. More so, COBRA is administered through your group health insurance plan, but you have to pay for it. That cost can be 102% of the current cost charged to your employer for your coverage.
In 2025, the average monthly cost of COBRA insurance ranges from $400 to $700 per individual.
Costs include:
- The portion of insurance coverage the employer was paying.
- The portion of insurance coverage the employee was paying.
- A 2% administrative fee.
How to Apply for COBRA Coverage
To obtain COBRA coverage, you can navigate the process in one of several ways. First, your employer will provide you with access to your plan, or you can call the current health insurance company you have now to apply for COBRA coverage directly.
If a qualifying event occurs, you or your employer will notify your health plan about this event. The plan then sends an election notice to you that gives you 60 days to respond. You have that amount of time to activate your COBRA coverage. In some situations, employers will pay a portion of this cost, but they do not have to do so.
How Long Does COBRA Insurance Last?
COBRA insurance coverage lasts from 18 to 36 months. This gives you time to find other health insurance options. Note that this coverage continues exactly the same coverage you had prior. That means you, your covered child, spouse, or other named party on that previous policy will receive the same extension of coverage.
The length of coverage depends on the qualifying event. If the qualifying event is the employee’s termination or reduction in hours of employment, you can maintain COBRA coverage for up to 18 months.
In situations where the qualifying event ended employment or led to a reduction in hours and the employee became eligible to receive Medicare less than 18 months before that event, COBRA coverage may last for 36 months.
COBRA Dental Coverage
Coverage can be provided for up to 18 months or until the beneficiary reaches the age of Medicare, whichever comes first. Coverage may be extended if it is determined you or your dependents are disabled under the Social Security Act provisions regarding disability.
The determination of disability must occur within the first 60 days of COBRA dental coverage. If qualified, coverage may be extended for up to 29 months. After the continuation period has commenced, and a spouse or dependent has another event that would entitle them to their own coverage, coverage may once again be extended. However, in no situation will a continuation of coverage last for more than 36 months from the first COBRA event that qualified for coverage.
However, you will be responsible for the full monthly premium. This includes any portion your employer may have paid previously, as well as an administrative surcharge of 2%. Although you must pay for COBRA dental insurance, the premiums will likely reflect a group rate, making coverage more affordable than if you were to purchase a new dental insurance plan.
The exception, however, would be if coverage is extended beyond the initial 18-month period due to disability or a secondary qualifying event. If coverage continues beyond 18 months, you will be responsible for 150% of the premium. Payment is due within 45 days of first choosing to extend coverage. After that, insurance carriers provide a 30-day grace period to make payments.
If you, as the employee, decide not to continue with COBRA dental insurance, your spouse, partner, or children can still purchase the coverage. Just like you, they will need to accept coverage within 60 days of the qualifying event. In addition, if any covered individual were to marry while covered, the spouse may be added at any time. Newborns may be added within 30 days of their birth.
COBRA insurance rules require the ability to convert your COBRA dental insurance to a direct-pay individual or family plan. Benefits of the COBRA dental insurance program must be exhausted before conversion. If you do not make timely payments, cancel coverage, or let coverage lapse, eligibility for conversion is withdrawn.
COBRA Vision Coverage
As COBRA insurance varies depending on what your employer’s insurance plan provides, it may cover costs towards vision care. Check with your insurance provider to ensure you are covered.
COBRA And The Government
Numerous government agencies control COBRA Health Insurance. For example, the Department of Labor and Treasury has jurisdiction over all the private-sector health plans and coverage. On the other hand, the Department of Health and Human Services controls the continuing coverage laws for public-sector health plans and coverage.
The Labor Department is responsible for interpreting and regulating the disclosure and notification of COBRA requirements. The Internal Revenue Service (IRS), along with the Department of the Treasury, has issued regulations on numerous COBRA provisions — most related to eligibility, premiums, and more.
Early Termination of COBRA Coverage
You can lose your COBRA coverage in the following cases:
- Failure to pay premiums
- Your previous employer cancels your group health plan
- Gained coverage under another group health plan
- Are eligible for Medicare benefits
- Engaging in misconduct, such as fraud
Alternatives to COBRA Health Insurance for 2025
COBRA’s costs can make it challenging for many people to maintain. That is why most people will want to find alternatives to COBRA as soon as possible. The most common option is to enroll in a marketplace health insurance plan.
Leaving your job for any reason, whether you were terminated or you quit, qualifies you for a Special Enrollment Period through the Healthcare Marketplace. This means that you have 60 days from the date of losing your job to seek out a new policy through the Marketplace options available in your area.
Once you apply for coverage through the Marketplace, you may qualify for:
- Savings on monthly premiums through premium tax credits
- Free or low-cost coverage from Medicaid
- Free or low-cost coverage through the Children’s Health Insurance Program (CHIP)
Eligibility Factors for COBRA Coverage
What is COBRA insurance, and when is it available? If you’re asking these questions, you may have lost your job. COBRA benefits are available to you if you lose your job through a qualified event. What are COBRA-qualified events? This could include:
- Your work hours were reduced
- You left your job
- Your child loses dependent child status under employer-sponsored health plans
- You are entitled to Medicare
- Your spouse, who provides health insurance, dies, or you divorce
COBRA rules differ from one state to the next. COBRA law is federal, but states have made adjustments to what must be provided. That includes COBRA insurance in Florida and COBRA insurance in Texas. Always check with your state to determine what COBRA Insurance coverage your employer or plan must offer to you.
FAQ
How does COBRA insurance work?
To obtain COBRA insurance, you must have been enrolled in a group health insurance plan and lost eligibility for it through a qualified reason. At that point, you have 60 days from the loss of that eligibility to enroll in COBRA coverage through the same health insurance plan. If you do, you will pay the premium costs associated with coverage.
Why Is COBRA more expensive?
What is COBRA? It is a backup plan. It means that you are no longer qualified to receive coverage through your employer. More so, COBRA medical insurance is meant to be temporary. Marketplace offerings tend to be significantly lower in cost.
Where can I find COBRA rules for 2025?
If you are currently on a COBRA plan, be sure to check with that plan to learn of any updates or changes. Otherwise, you can get updates on COBRA insurance rules and laws through the U.S. Department of Labor.
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