COBRA, Priced Honestly

COBRA has a reputation problem, and it is not the one people think. The program is not a scam. It does exactly what it promises: keeps your exact plan, with your exact doctors, running for up to 18 months after you leave. The reputation problem is the bill, because the bill reveals what your employer coverage always cost and hid.

The 102 percent rule

When you were employed, you saw a fraction of your premium on your paystub. In 2025 the average worker with family coverage contributed about $571 a month while the full premium ran about $2,249. On COBRA you pay the whole thing, plus a 2 percent administrative fee. That is the law's own pricing formula: 102 percent of the full premium.

Run the national averages and the number lands like this. Single coverage averaged $9,325 a year in 2025. Add 2 percent, divide by twelve: about $793 a month. Family coverage averaged $26,993. The same arithmetic gives about $2,294 a month. Your plan's number will differ, and your election notice will state it exactly, but if you want the gut-check figure before the paperwork arrives, it is roughly eight hundred single, twenty-three hundred family.

The mechanics, briefly and exactly

COBRA applies to group health plans of employers with 20 or more employees. If your employer is smaller, federal COBRA does not apply, though most states run a mini-COBRA of their own, typically 9 to 18 months, with different rules at different sizes.

Quitting is a qualifying event, as is being laid off. Your employer has 44 days from that event to mail you the election notice. You then have 60 days to elect, and if you elect, 45 days to make the first payment, which can cover several months at once because coverage is retroactive to the day your job plan ended. Ongoing payments get a 30-day grace period, and the plan does not have to send you a bill. Missing a payment by day 31 can end coverage for good.

Eighteen months is the standard span after leaving a job. A disability can stretch it to 29, and certain second events stretch it to 36. Most quitters will never need those extensions, and this guide will not pretend otherwise.

When COBRA is genuinely the right door

There are exactly three situations where I would tell you to take COBRA without much hesitation.

First, you are mid-treatment: an oncology protocol, a pregnancy in the third trimester, a surgeon already booked. Your plan's network and your accumulated deductible and out-of-pocket progress carry forward unchanged. That continuity has real, countable value that can exceed the premium gap.

Second, you are inside a tight window. COBRA can be elected retroactively, which means the coverage can start before the election paperwork. That property turns the 60-day election window into a free option, a strategy this guide treats on its own later.

Third, your income for the year is high enough that marketplace subsidies are off the table anyway, and your employer plan is unusually rich. Compare honestly, but compare: an unsubsidized marketplace benchmark averaged $625 a month for a 40-year-old in 2026, against roughly $793 for average COBRA single coverage. COBRA wins that fight only when its benefits are far better than the benchmark silver plan, and you should make it prove it.

What COBRA is not, ever, is the safe default. The safe default is running the marketplace numbers first, which is a sentence I will repeat often enough to annoy you. Operators and repeaters of this advice on r/personalfinance consistently land in the same place: marketplace almost always prices below COBRA, sometimes by half, and the people who elected COBRA on reflex are overrepresented among those asking how to escape it a month later.

There is one more property of the COBRA decision that changes how you should hold it: you are allowed to not decide yet.