What is Cobra Insurance?
COBRA insurance is a federal program that lets you temporarily keep your employer-sponsored health insurance after leaving your job, typically for up to 18 months, by paying the full premium yourself plus a 2% administrative fee. It exists to prevent coverage gaps when you lose job-based health benefits due to layoffs, quitting, reduced hours, or certain other qualifying events.
How does COBRA insurance work?
COBRA allows you to continue the exact same group health plan you had while employed, but you pay the entire premium that your employer previously subsidized. You receive a COBRA election notice within 14 days of your qualifying event, then have 60 days to decide whether to enroll.
How much does COBRA coverage cost?
You pay 100% of the premium your employer negotiated with the insurance carrier, plus up to 2% for administrative costs. If your employer previously covered 70% of a $600 monthly premium, you now pay approximately $612 per month ($600 × 1.02).
Who qualifies for COBRA insurance?
COBRA applies to employers with 20 or more employees in the prior year. Qualifying events include voluntary or involuntary job loss (except gross misconduct), reduction in work hours making you ineligible for benefits, divorce or legal separation from a covered employee, death of a covered employee, loss of dependent child status, or the covered employee becoming Medicare-eligible.
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How long does COBRA coverage last?
Standard COBRA lasts 18 months from your qualifying event. If you're disabled under Social Security definitions at termination or within the first 60 days of COBRA, you can extend to 29 months, though premiums increase to 150% of the full cost in months 19-29.
What is the difference between COBRA and regular health insurance?
COBRA is continuation coverage of your existing employer plan with identical benefits, networks, deductibles, and out-of-pocket maximums. Regular health insurance purchased through healthcare.gov, state marketplaces, or private insurers offers different plan designs, potentially different provider networks, and possibly lower premiums with Advanced Premium Tax Credits if your income qualifies.
When should you actually use COBRA insurance?
COBRA makes sense when you've met most of your annual deductible or out-of-pocket maximum and have upcoming expensive care—surgery, ongoing treatment, or high prescription costs. It's valuable if your employer plan has a provider network or specific doctors unavailable in marketplace plans, or if you're between jobs for under 60 days and retroactive coverage protects you.
FAQ
Can I drop COBRA once I start it?
Yes, you can cancel COBRA anytime without penalty by stopping premium payments or notifying your plan administrator in writing. You cannot re-enroll once you voluntarily terminate, and the decision is final for that qualifying event.
What happens if I miss a COBRA payment?
You have a 30-day grace period after each premium due date. Coverage continues during the grace period, but if you don't pay within 30 days, the plan terminates retroactively to the last day of paid coverage with no reinstatement option.
Does COBRA cover dental and vision insurance?
Yes, if your employer offered dental and vision as part of the group health plan. You can elect medical, dental, and vision separately—you're not required to continue all coverage types, and premiums are calculated independently for each.
Can I get COBRA if I was fired?
Yes, termination for any reason except gross misconduct qualifies you for COBRA. Gross misconduct is narrowly defined and must be deliberate, willful violation of employer rules—poor performance or attendance issues typically still qualify you.
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First time home buyer steps from budget to closing
Before viewing homes, review income, debt, savings, credit, and the full monthly cost of ownership. A mortgage payment is only one component; property taxes, homeowners insurance, mortgage insurance, HOA dues, utilities, maintenance, and repairs may also apply. A debt to income ratio calculator provides a planning estimate, but a lender’s underwriting rules determine how debts and income are treated for a loan application.
Mortgage preapproval can help define a conditional financing range, but it is not final approval or a requirement to spend the full amount. Compare loan estimates from lenders, including the interest rate, annual percentage rate, points, lender fees, cash to close, and projected payment. An offer may involve earnest money, inspection terms, financing conditions, appraisal issues, and title review. Escrow and title insurance serve different purposes and should be reviewed separately.
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