COBRA After a Layoff: What It Is, What It Costs, and How It Works
COBRA lets you keep your current health coverage after a layoff — but it comes at a significant cost. Here is exactly how COBRA works, how to elect it, and whether it makes sense for you.
COBRA lets you keep your existing employer health coverage after a layoff, but it comes at a significant cost because you pay the full premium yourself. Understanding exactly how it works helps you decide whether it is the right choice for your situation.
What COBRA Actually Is
COBRA is a federal law that requires employers with 20 or more employees to let you continue your group health coverage after a qualifying event like a layoff. You keep the exact same plan — same network, same benefits, same deductible — but you become responsible for the entire premium, including the portion your employer previously paid, plus up to a 2 percent administrative fee.
How Much COBRA Costs
Because you pay the full premium with no employer contribution, COBRA is often more expensive than people expect. While employed, you might have paid $150 a month for a plan that actually cost $600 — under COBRA, you pay the full $600 plus the administrative fee. Individual coverage commonly runs $400 to $700 per month; family coverage frequently exceeds $1,500 to $2,000. Ask HR or your benefits administrator for the exact COBRA premium for your specific plan.
Your 60-Day Election Window
You have 60 days from the later of your coverage end date or the date you receive your COBRA election notice to elect coverage. Critically, COBRA is retroactive: if you elect within the window, coverage applies back to the date your employer coverage ended. This means a healthy person can choose to wait — going technically uncovered — and elect COBRA only if a medical need arises during the window.
How Long COBRA Lasts
COBRA continuation coverage typically lasts up to 18 months after a layoff, though certain circumstances can extend it to 29 or 36 months. It is designed as a bridge, not a permanent solution. As your COBRA period approaches its end, exhausting it triggers a special enrollment period for the ACA marketplace, so you can transition without a gap.
When COBRA Makes Sense
COBRA is often worth the cost if you are mid-treatment for a condition, have established relationships with specific specialists, take medications covered well under your current plan, or have met a significant portion of your deductible for the year. Preserving your exact network and not resetting your deductible can outweigh the premium in these situations.
When to Consider Alternatives
If you are generally healthy and cost is your primary concern, an ACA marketplace plan with income-based subsidies is frequently much cheaper than COBRA for comparable coverage. A spouse's employer plan, if available, is often cheaper still. Because COBRA's retroactive election lets you wait, a reasonable strategy is to compare a marketplace quote first and keep COBRA as a fallback during your 60-day window. Compare both with the LayoffNext COBRA vs. Marketplace tool.
Frequently Asked Questions
Is COBRA worth it after a layoff?
It is worth it if network continuity matters to you — mid-treatment care, established specialists, or a substantially met deductible. If you are healthy and cost-focused, a subsidized marketplace plan is often significantly cheaper for comparable coverage.
How long do I have to sign up for COBRA?
You have 60 days from the later of your coverage end date or your COBRA election notice. Because coverage is retroactive, electing within that window restores coverage back to when your employer plan ended.
Can I cancel COBRA if I find a cheaper plan?
Yes, you can drop COBRA at any time. If you find a marketplace plan or get coverage through a new job, you can switch. Note that voluntarily dropping COBRA does not always trigger a marketplace special enrollment, so confirm your timing.
Official resources
This article is educational and not advice. For your specific situation, verify with these authoritative sources and qualified professionals.
U.S. Department of Labor — COBRA Continuation Coverage
The federal agency that administers COBRA rules; explains your rights, election windows, and employer obligations.
Healthcare.gov
Compare ACA marketplace plans and check whether you qualify for income-based subsidies as an alternative to COBRA.
Your plan administrator / HR
Your exact COBRA premium, coverage end date, and election deadline come from your specific plan — confirm these in writing.
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Educational content only. LayoffNext provides general information and is not a substitute for legal, financial, tax, or mental health advice. For matters relating to unemployment insurance, severance agreements, or personal finances, please consult a licensed professional or contact official government resources.
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