Losing job-based health insurance can feel like a second shock after a layoff, resignation, divorce, reduction in hours, or another life change. One of the first options many people see is COBRA continuation coverage. It can look familiar and reassuring because it often lets you keep the same plan, same doctors, and same network for a limited time. But familiarity and affordability are not always the same thing.
So how do you decide whether COBRA is actually the right move?
In this post you’ll learn how COBRA works in real life, when it tends to make sense, when a Marketplace plan or Medicaid may be worth a closer look, and what practical factors often matter most when you’re comparing your options. If you want a broader foundation first, this overview of keeping employer coverage after a job change can help frame the basics before you compare next steps.
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COBRA is one of those benefits people often hear about long before they ever use it. The idea sounds simple: keep your old employer plan for a while after coverage would otherwise end. In practice, though, the decision often turns on timing, premium cost, provider access, deductibles already paid, prescription needs, and what else is available in your state.
That matters because COBRA is rarely just a paperwork question. It is often a budget question, a treatment-continuity question, and sometimes a legal-rights question too.
The U.S. Department of Labor explains that COBRA generally lets qualified beneficiaries continue group health coverage after certain qualifying events, but the individual may be charged the entire premium plus up to a 2% administrative fee. That cost shift is one reason COBRA can feel very different from employer coverage, even when the insurance card looks the same (U.S. Department of Labor).
COBRA is a federal continuation coverage law that often applies to private-sector and state or local government group health plans when the employer had at least 20 employees on more than half of its typical business days in the prior calendar year (U.S. Department of Labor). In general terms, it allows employees, spouses, former spouses, and dependent children to continue the same group health coverage for a limited period after a qualifying event causes that coverage to end.
For job loss or reduction in hours, the standard maximum continuation period is typically 18 months. In some situations, that period can be extended to 29 months for disability-related reasons or 36 months for certain other qualifying events affecting spouses and dependents (U.S. Department of Labor; U.S. Department of Labor Fact Sheet).
The big attraction is continuity. You often keep the same plan design, provider network, and covered benefits. The big downside is cost. Once the employer contribution falls away, the former employee may be billed for the full premium, plus that 2% administrative charge (U.S. Department of Labor).
This is often the first reality check.
Many workers are used to seeing only their payroll contribution, not the full premium. COBRA changes that. A family that was paying a few hundred dollars per paycheck while employed may suddenly see a monthly COBRA bill in the thousands.
That is not unusual. According to KFF’s 2025 Employer Health Benefits Survey, the average annual premium for employer-sponsored health insurance was $9,325 for single coverage and $26,993 for family coverage. Workers paid only part of that while employed; on average, they contributed 16% of the single premium and 26% of the family premium, with employers covering the rest (KFF).
Here’s what that often means in practical terms: