What Is COBRA Insurance?
Losing a job or hours can be stressful—especially when it comes to keeping
health insurance.
COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you temporarily continue the same employer plan after a qualifying event.
This guide explains how COBRA works, what it costs, who qualifies, how long it lasts, and smart alternatives if COBRA is too expensive.
Quick answer: COBRA keeps your same plan, doctors, and network for 18–36 months, but you usually pay the full premium plus a 2% admin fee (100%–102%). You have 60 days to elect coverage; the first payment is due within 45 days after you elect.
How Does COBRA Insurance Work?
COBRA is a federal law for employers with 20+ employees that allows eligible employees, spouses, and dependents to continue the same group plan after a qualifying event. It’s not a new policy—it’s the same coverage with uninterrupted benefits and networks.
Key Features of COBRA
- Continue your existing cobra health coverage (same benefits and doctors)
- Available for 18–36 months depending on the event
- You pay 100%–102% of the premium (full cost + 2% admin fee)
- Applies to employers with 20+ employees (smaller groups may have state “mini-COBRA”)
COBRA Qualifying Events (The 7 Most Common)
These events can trigger COBRA for employees or their dependents:
- Termination of employment (except gross misconduct)
- Reduction of hours below eligibility
- Divorce or legal separation from the covered employee
- Death of the covered employee
- Dependent child loses eligibility (ages out)
- Employee becomes entitled to Medicare (may extend dependent coverage)
- Employer bankruptcy affecting retiree coverage
- Event occurs.
- Employer notifies the plan within 30 days.
- COBRA election notice sent within 14 days of plan notification.
- You have 60 days to elect (coverage is retroactive).
- First payment due within 45 days after you elect.
- Coverage lasts 18–36 months.
How Much Does COBRA Cost Per Month?
Direct answer: Most people pay the entire group premium (your portion + your employer’s former portion) plus up to a 2% admin fee. Some severance packages subsidize COBRA—ask your employer.
COBRA Cost Examples
| Scenario | Total Plan Premium | What You Paid Before | Your COBRA Cost |
|---|---|---|---|
| Single Coverage | $700/mo | $100/mo | $714/mo (700 × 102%) |
| Family Coverage | $1,800/mo | $400/mo | $1,836/mo (1,800 × 102%) |
Note: If you qualify for an 11-month disability extension, cost can rise to 150% of premium during the extension period.
Who Pays for COBRA After Termination?
You do—unless your employer offers a subsidy in severance. Standard COBRA requires paying 100%–102% of the premium directly to the plan administrator.
Does COBRA Coverage Begin Immediately?
Yes—once you elect within 60 days and pay by the deadlines, coverage is retroactive to the date coverage was lost, preventing gaps in care.
How Long Does COBRA Last?
- 18 months for termination or reduction of hours
- Up to 36 months for divorce, death, dependent aging out, or certain Medicare scenarios
Employer Responsibilities Under COBRA
The COBRA notice clocks run against the plan sponsor and the plan administrator, not the departing employee. Federal COBRA applies to private-sector employers with 20 or more employees on at least half of their typical business days in the previous calendar year, counting both full- and part-time employees; below that threshold the federal rules do not apply (26 CFR §54.4980B-2, Q&A-5).
- General notice — 90 days. Written notice of COBRA rights must reach the covered employee and spouse within 90 days of plan coverage starting (29 CFR §2590.606-1).
- Employer to plan administrator — 30 days. Termination, reduction in hours, death, Medicare entitlement or employer bankruptcy must be reported within 30 days of the event (IRC §4980B(f)(6)).
- Election notice — 14 days. The administrator then has 14 days from that report to issue the election notice (29 CFR §2590.606-4(b)(1)).
- Self-administered plans — 44 days. Where the employer is also the plan administrator, the 30- and 14-day steps collapse into a single 44-day deadline from the qualifying event (29 CFR §2590.606-4(b)(2)).
- Election period — at least 60 days. Qualified beneficiaries must be given no fewer than 60 days to elect (IRC §4980B(f)(5)).
Advantages & Disadvantages of COBRA Insurance
Advantages
- Same cobra medical insurance plan, doctors, and network
- No underwriting or waiting period; pre-existing conditions covered
- Retroactive start avoids coverage gaps
Disadvantages
- Cost: You pay full premium + admin fee
- Temporary: 18–36 months only
- No income-based subsidies (unlike ACA Marketplace)
How to Enroll in COBRA
- Watch for your COBRA election notice after a qualifying event.
- Compare options (COBRA vs. ACA Marketplace) before electing.
- Elect within 60 days of the notice/coverage loss.
- Pay the first premium within 45 days after electing to activate retroactive coverage.
Alternatives to COBRA (Often More Affordable)
ACA Marketplace Plans
- Income-based subsidies may lower premiums drastically
- Special Enrollment when you lose employer coverage
Spouse’s Employer Plan
- Typically must enroll within 30 days
Medicaid
- Free or low-cost if you qualify by income
Short-Term Medical
- Lower premiums; may exclude pre-existing conditions
Ask Medcore for current Texas rules & timelines.
Why Choose Medcore Brokerage
As an employee benefits broker in Texas, Medcore helps you evaluate COBRA vs. ACA, run cost comparisons, and avoid lapses. Have questions? Contact us for guidance.
Frequently Asked Questions
What is COBRA and how does it work?
COBRA lets you continue your employer-sponsored health plan after a qualifying event. You keep the same coverage and network but pay the full premium plus up to 2% in administrative fees.
How much does COBRA cost per month?
Typically the entire premium (your share + your employer’s former share) plus up to 2% admin fee. See examples above.
What are the disadvantages of COBRA insurance?
It’s expensive, temporary (18–36 months), and does not include income-based subsidies like ACA Marketplace plans.
Who pays for COBRA after termination?
You do—unless the employer subsidizes it in severance.
How long does COBRA last?
18 months for termination/reduced hours; up to 36 months for some dependent events.
Does COBRA coverage begin immediately?
Once you elect within 60 days and pay on time, coverage is retroactive to the loss date.
What are the 7 COBRA qualifying events?
Termination (other than gross misconduct); reduction of hours; divorce or legal separation; death of the covered employee; dependent child losing eligibility; employee’s Medicare entitlement (affecting dependents); certain employer bankruptcies impacting retiree coverage.
Written by
Trey Driver
President of Medcore Brokerage in McKinney, Texas. Licensed in Texas and Oklahoma (TX General Lines Agent #1797664), helping Texas employers with 50 or more employees design and run their benefits since 2012.