What Is COBRA Insurance? Cost, Rules & How It Works

Quick answer: COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that lets employees and their dependents keep their employer's group health plan for a limited time after a qualifying event, like job loss or reduced hours. Coverage typically lasts 18 months, extending up to 36 months in certain situations, and costs up to 102% of the full premium since the employer no longer subsidizes any of it.

How does COBRA work?

When someone experiences a qualifying event, such as losing a job, having their hours reduced, divorce, or a dependent aging off a parent's plan, their employer's group health plan must notify them of their right to continue coverage. The individual then has 60 days to decide whether to elect COBRA.

How long does COBRA last?

• 18 months for most qualifying events, like job loss or reduced hours
• 36 months for events like divorce, the covered employee's death, or a dependent aging out
• 29 months in cases involving a disability determination made within the first 60 days of coverage, though the cost increases to up to 150% of the premium during months 19 through 29

How much does COBRA cost?

Under COBRA, the individual pays the entire premium, both what they used to pay and what their employer used to cover, plus a 2% administrative fee, for a total of up to 102% of the plan's full cost. Because employers often cover a significant share of premiums during active employment, this can mean a sharp increase, commonly landing in the $600 to $800 per month range for individual coverage, more for family plans, depending on the plan and region.

Who is eligible for COBRA?

COBRA generally applies to employers with 20 or more employees, plus some state and local government employers. Some states have "mini-COBRA" laws extending similar protections to employees at smaller companies.

COBRA vs. ACA Marketplace coverage

FAQ

How long does COBRA insurance last? Standard COBRA coverage lasts 18 months. It can extend to 36 months for events like divorce or the death of the covered employee, or up to 29 months in cases involving a qualifying disability.

Why is COBRA so expensive? COBRA is expensive because the individual pays the full premium, both the employee and employer share, plus a 2% administrative fee, without the employer subsidy they had during active employment.

Is COBRA better than a Marketplace plan? It depends. COBRA keeps you on the exact same plan and network, which matters if you're mid-treatment with a provider. ACA Marketplace plans are often cheaper, especially with income-based subsidies, but may involve a different network.

What counts as a COBRA qualifying event? Common qualifying events include job loss, reduced work hours, divorce or legal separation, the death of the covered employee, and a dependent child aging off the plan at 26.

We help employers set up compliant COBRA administration and guide departing employees toward the right next step, whether that's COBRA or another option. Questions about your plan? Let's talk.

About Bennie

Bennie is a modern employee benefits firm dedicated to transforming how employers design, manage, and deliver benefits. By combining world-class brokerage services with user-friendly technology, Bennie helps organizations lower costs and streamline administration while giving employees a centralized platform to navigate their healthcare. Headquartered in New York City, Bennie is licensed in all 50 states.