Then the paperwork arrives, and the number on it can feel like a second layoff.
That number is COBRA, the federal law that lets you keep your employer's health plan for up to 18 months after you leave.
The catch is that you now pay what your employer used to cover.
Average annual premiums for family coverage ran around $25,572 in 2024, according to KFF's employer survey, with workers typically covering about $6,575 of that.
On COBRA, the full amount lands on you — roughly $2,100 a month for a family, before any administrative fee of up to 2%.
For many households, that's more than a mortgage payment.
You generally have 60 days from losing coverage to elect COBRA, and it can be retroactive — meaning if you skip it, then get sick in week seven, you can still sign up and owe back premiums.
That's a safety net, but it's also how people end up with a surprise bill for two months of coverage they thought they'd dodged.
The subsidy story is the part most people get wrong.
The generous pandemic-era COBRA subsidies expired long ago.
Unless Congress acts again, there is no broad federal discount.
Some states run their own programs, and a few offer help through health insurance marketplaces, but eligibility varies wildly.
Here's where it gets interesting, and where the incentives get murky.
COBRA is administered by insurers and third-party benefits companies that collect those premiums.
Hospitals and drugmakers benefit when people stay on generous commercial plans rather than moving to lower-reimbursing Medicaid or marketplace coverage.
Everyone in the chain has a reason to keep you enrolled — except your bank account.
The alternative most people never price out is the ACA marketplace.
After the enhanced subsidies from the Inflation Reduction Act, many households qualify for plans that cost far less than COBRA, sometimes with similar networks.
A family of four earning $80,000 might see marketplace premiums in the hundreds per month rather than thousands, depending on the state and plan.
The trade-off is narrower networks and higher deductibles, and those enhanced subsidies are set to expire after 2025 unless extended — a cliff worth watching.
If you're between jobs for a few weeks, a marketplace special enrollment period triggered by loss of coverage usually gives you 60 days to sign up.
Medicaid may cover you immediately in expansion states if your income drops.
And if you're generally healthy with savings set aside, a short-term plan or simply going uninsured for a brief window is a gamble some people take — a risky one, since a single ER visit can run into five figures.
What nobody advertises: you can often mix and match.
Put the kids on one plan, the adults on another.
Check whether your spouse's employer offers coverage, even at a higher tier.
And always ask HR for the exact COBRA rate in writing before you decide.
The number on the form is negotiable only in the sense that you can decline it.
The real lesson is that COBRA is a bridge, not a destination.
It protects continuity of care and keeps you from being uninsured, which matters.
But treating it as the default choice is how families burn through emergency savings in four months.
Our take: price the marketplace before you sign anything, and treat COBRA as the expensive backup it is.
The system is built so inertia works against you — the companies collecting those premiums are counting on you not shopping around.
Final Thoughts
Spend one afternoon doing the math, because the difference can be thousands of dollars a year.