Millions of Americans who lose a job assume they can simply keep their health plan through COBRA.
What many discover too late is that the price tag can rival a mortgage payment, and the clock starts ticking the moment employment ends.
COBRA lets you stay on your former employer's health plan for up to 18 months in most cases.
The catch is that you now pay the full premium yourself, plus a small administrative fee.
Your employer's contribution, which quietly covered most of the bill, vanishes overnight.
According to KFF, the average annual premium for employer-sponsored family coverage ran around $25,000 in recent years, with workers typically contributing a fraction of that.
For a family, that can mean north of $2,000 a month.
For individual coverage, expect several hundred dollars or more, depending on your plan and state.
You generally have 60 days from the date you lose coverage to elect COBRA, and another 45 days after that to pay.
Miss the deadline and you are locked out, often with no way back in until the next open enrollment period.
If you skip COBRA and go without coverage, you might assume you can sign up later on the Affordable Care Act marketplace.
That is true only if you qualify for a special enrollment period, which a job loss usually triggers.
But those subsidies are income-tested, and if you land a new job quickly, your window may close before you use it.
Insurers and plan administrators, mostly.
COBRA is a compliance obligation for employers, not a money-maker, but it keeps premiums flowing to carriers without an employer chipping in.
The administrative fee, usually 2 percent, is small, yet it adds up across thousands of former workers.
There are cheaper paths worth checking before you write that first check.
A marketplace plan with subsidies could cost far less than COBRA if your income drops.
A spouse's employer plan may offer coverage, though that usually requires a qualifying life event.
Short-term plans exist but often exclude pre-existing conditions and essential benefits, so read the fine print carefully.
A gap in coverage can leave you exposed to full-price medical bills and complicate future enrollment.
If you are staring down a layoff, request your COBRA paperwork immediately, compare it against marketplace quotes, and run the numbers before the 60-day clock runs out.
Our take: COBRA is a safety net with a luxury price tag, and it is priced for people who have no better option.
If you have any alternative, run the math first, because loyalty to your old plan rarely pays off.
The system is not designed to be affordable.
Final Thoughts
It is designed to be available, and those are two very different things.