People who lose a job at a company with 20 or more employees can usually stay on the employer’s health plan for up to 18 months under a federal law called COBRA. The catch is the price. The plan can charge up to 102 percent of its cost, which means the worker pays the share the employer used to cover, plus a small fee.
The U.S. Department of Labor’s COBRA page says the law covers employers with 20 or more employees in the prior year, and that the premium can run up to 102 percent of the cost to the plan. For many households, the first COBRA bill is a shock.
Who is covered, and who is not
The law reaches group health plans of private employers that had at least 20 employees on more than 50 percent of their typical business days in the previous calendar year. State and local government plans are covered. Federal government plans and church-sponsored plans are not, according to the Labor Department’s employee guide to COBRA.
Workers at very small employers may therefore have no COBRA right at all. The Labor Department’s consumer FAQ adds that COBRA is typically not available if the company no longer offers a health plan. Its help line for private-sector plans is 1-866-444-3272.
Anyone who is leaving a job at an employer with 20 or more people, or who expects hours to be cut, can start by asking the benefits office what the monthly COBRA premium would be. That one number, set at up to 102 percent of the plan’s cost, decides how much room is left in the household budget for everything else.
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How long COBRA lasts
The Labor Department’s Employee Benefits Security Administration says continuation coverage usually lasts up to 18 months, and that certain life events can extend it to 36 months. The 18-month period applies when a job ends, other than for gross misconduct, or when hours are cut.
The 36-month periods apply to other events. The employee guide lists them as the employee becoming entitled to Medicare, a divorce or legal separation, the death of the employee, and a child losing dependent status under the plan. In those cases the spouse or the child is the one who gets the coverage.
The guide also describes an extension to 29 months when Social Security finds a family member disabled before the 60th day of coverage and the disability lasts. During those extra months the plan can charge up to 150 percent of the cost.
What the 102 percent actually means
The employee guide explains that the plan can charge up to 102 percent of its cost for similarly situated people without a qualifying event. That cost can include both the employer’s share and the employee’s share, plus a 2 percent administrative charge.
A worker who paid a modest payroll deduction for family coverage may find the new bill much larger. The employer’s share was always part of the real cost of the plan, and COBRA passes the whole amount along. The bill also covers every person on the plan, not only the worker.
The consumer FAQ puts it in three parts: the worker’s former share, the employer’s share and two percent on top. Anyone comparing options can ask the plan administrator for the exact monthly figure for one person and for the whole family, since the two can differ a great deal.
The deadlines that can cost coverage
The plan must give at least 60 days to decide after the election notice arrives, according to the Labor Department’s guide. The 60 days start on the later of the date the notice is provided or the date coverage would otherwise end.
The plan cannot require a payment at the time of election. It must allow at least 45 days after electing for the first premium, and later payments get a grace period of at least 30 days. If a payment is late but inside the grace period, the plan may pause coverage until it arrives and must then reinstate it back to the start of that period.
Missing the election window ends the right to COBRA. That makes the notice one of the most important letters a laid-off worker receives, and one that can get buried in the first weeks.
Is COBRA the only choice?
COBRA is temporary. HealthCare.gov says people can compare the cost of COBRA with plans available through the Marketplace before deciding. It says people can enroll in a Marketplace plan within 60 days of losing job-based coverage, and that Marketplace plans may cost less than COBRA, especially with savings based on income.
The same page says that when COBRA coverage ends, there are 60 days to enroll in a Marketplace plan through a special enrollment period. Leaving COBRA voluntarily is treated differently, so the timing of any change is worth confirming first.
The money question is what happens to the rest of the budget. A COBRA premium at up to 102 percent of the plan’s cost arrives just as paychecks stop. Households watching that bill are also deciding which other costs can be trimmed.
Leaving a job and facing a COBRA bill?
A COBRA premium at up to 102 percent of the plan’s cost lands at the moment income drops. The health bill is one line; food, heating, drugs and property taxes keep coming, and several programs that help with them have to be applied for.
That is where this story turns from COBRA to the wider household budget. The Benefits Checklist scans 11 benefit programs, including Medicare Savings Programs, Extra Help for prescriptions, SNAP and heating help, and it comes with the 2026 income limits and a 50-state phone directory.
Get the 11-program benefits scan and 2026 income limits in The Benefits Checklist →
More Financial Reading
- 21 Ways to Stretch a $2,087 Social Security Check
- 15 Places to Find Your Share of the $4.25 Billion States Give Back
- 21 Ways Retirees Can Raise $1,000 Fast Without a Job
This article was produced with AI assistance and edited for accuracy against the sources linked above.
