COBRA is a federal law that allows eligible employees and their dependents to continue their employer-sponsored group health coverage for a limited time after events like job loss, reduced work hours, divorce, or a dependent aging off a parent's plan. It applies mainly to employers above a certain size.
- Coverage under COBRA is usually identical to what you had while employed, same plan, same network, same benefits.
- You typically pay the full premium yourself, including the portion your employer previously covered, plus an administrative fee.
- COBRA coverage is time-limited, often up to 18 months, though certain situations can extend that period.
Because you're paying the full premium without an employer subsidy, COBRA is often significantly more expensive per month than what you paid as an active employee, even though the coverage itself doesn't change. It can still be worthwhile for people mid-treatment who want to keep the same doctors and network without a coverage gap.
A common misunderstanding is assuming COBRA is a new, cheaper plan. It's a continuation of your existing employer plan, at a higher personal cost, not a separate discounted product.