• COBRA is not a type of insurance policy; it’s a federal law that allows you to keep your previous employer’s health insurance for up to 18 months after leaving your job.
• COBRA requires you to pay 100% of the health insurance costs plus up to 2% in administrative fees, making it very expensive.
• You have 60 days to sign up for COBRA, but premiums are retroactive if you wait.

What is COBRA insurance?

COBRA stands for the Consolidated Omnibus Reconciliation Act, created as a health insurance safety net. It’s not a type of health insurance plan.

COBRA lets you extend your former employer’s health plan. You benefit from the same coverage, though your former employer stops contributing, which means you pay the entire premium.

Before the Affordable Care Act (ACA), people with pre-existing conditions had difficulty getting health insurance on the private market. Although the ACA removed pre-existing condition clauses, COBRA remains an option for keeping health insurance during the transition.

Who is eligible for COBRA?

You can elect COBRA for you and your family when:

• You quit your job
• You were fired (unless it was for “gross misconduct”)
• Your hours were reduced
• You lost coverage because of a death or divorce

How does COBRA health insurance work?

If you become eligible for COBRA, your employer will notify the insurance company within 30 days of your last day.

The health insurance company will send you information about how to sign up for COBRA and how much it will cost. You have 60 days to sign up.

With COBRA, you can use your health insurance plan like you did when employed. However, you’ll pay all the costs without help from your former employer.

What is mini-COBRA insurance?

Mini-COBRA permits employees of companies with 20 or fewer employees to continue health insurance coverage. It allows you to pay group rates for a specified time period. Most states have mini-COBRA laws for people who are employed by small businesses.

These state laws work like the federal COBRA law, but the length of eligibility may differ:

• Sixteen states allow mini-COBRA coverage for 18 months.
• New York and California allow mini-COBRA for 36 months.
• Connecticut lets residents have a mini-COBRA plan for 30 months.

Not all states allow mini-COBRA plans, and others have limited eligibility. State laws vary significantly, so check with your state’s Department of Insurance for specifics about mini-COBRA laws.

What are the alternatives to COBRA?

Alternatives to COBRA include a catastrophic health plan, short-term health insurance, or an ACA-compliant health plan. Any of these may be more affordable.

• The health insurance marketplace. Losing employer-sponsored coverage entitles you to buy an ACA plan outside the normal open enrollment period. Under the health care reform law, insurers can’t charge much higher premiums or reject your application because of your health.
• The private market. You might be able to find an individual health insurance plan outside the marketplace that offers you better benefits and still costs less than COBRA.
• A spouse’s plan. If your spouse has their own insurance, you can likely be added to the plan.
• A catastrophic health plan. These ACA plans are available to people under 30 who face specific hardships. They have high deductibles but provide low-cost protection.
• Children’s Health Insurance Program (CHIP). If coverage for your kids is your main concern, see if they qualify for CHIP.
• Short-term health plans. Short-term plans bridge the gap until you get new insurance, but have some limitations. Some states don’t allow short-term plans and more states restrict how long you can keep one.

If you decide on a COBRA alternative, check the provider networks and what’s covered. Find out more about your options by using our Health Insurance Finder tool.

Is COBRA insurance worth it?

COBRA is expensive, but it could be worth it if you can’t find a better alternative. If you have a lot of medical needs and can’t be without coverage, COBRA is an easy way to continue with the same network and providers.

You may also want a COBRA plan if you expect new coverage to begin soon, such as with a new employer, but there is an anticipated gap before your new coverage kicks in.