What Is COBRA?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act — which tells you nothing useful. What it actually means: when you lose employer-sponsored health insurance, federal law gives you the right to keep that exact same coverage for a period of time by paying the full premium yourself.

Who Qualifies

COBRA applies when you lose group health coverage due to:

• Voluntary or involuntary job loss (except for gross misconduct)
• Reduction in work hours below eligibility threshold
• Transition between jobs
• Divorce or legal separation from covered employee
• Death of covered employee
• Child aging off parent's plan at 26

How Long Does It Last?

• 18 months for most qualifying events
• 36 months for divorce, death, or dependent aging off

The Price

This is the hard part. Under COBRA, you pay the full premium — your previous contribution plus your employer's contribution — plus up to 2% administrative fee. If your employer was paying $1,200/month and you paid $300, your COBRA cost is approximately $1,530/month.

Is It Worth It?

Sometimes yes. Situations where COBRA makes sense:

• You've nearly met your deductible and have planned care coming up
• You're mid-treatment and changing plans would disrupt care
• Marketplace alternatives are actually more expensive after subsidies
• You'll be re-employed quickly and just need a bridge

In most other situations, marketplace plans — especially with income-based subsidies — are significantly cheaper.