Millions of Americans are about to learn a hard truth about their health coverage.
If you lose your job, keeping the same plan through COBRA can cost more than your rent.
The Consolidated Omnibus Budget Reconciliation Act lets you stay on your former employer's health plan for up to 18 months.
The catch is that the employer usually stops paying its share.
You get stuck with the full premium, plus a small administrative fee.
According to KFF's 2024 Employer Health Benefits Survey, the average annual premium for family coverage hit $25,572.
Workers typically paid about $6,575 of that.
On COBRA, you could owe the entire bill — roughly $2,100 a month before any fee.
The average annual premium for individual coverage was $8,951, with workers covering about $1,368.
Switch to COBRA and you may face around $750 a month.
The sticker shock has real consequences for household budgets.
A newly laid-off worker who was paying $115 per paycheck suddenly faces a bill larger than a car payment.
Miss a payment and coverage can vanish retroactively, leaving old medical bills exposed.
Employer contributions to health premiums are generally tax-free.
COBRA payments usually are not deductible unless your total medical costs exceed 7.5% of your adjusted gross income.
Many people assume COBRA is the only option.
Losing job-based coverage counts as a qualifying life event, which opens a special enrollment window on Healthcare.gov and state marketplaces.
Enhanced premium tax credits have helped many households find marketplace plans for far less than COBRA.
A family of four with moderate income may qualify for significant help, though those enhanced subsidies face an uncertain future in Congress.
Short-term health plans and association plans look cheap but can exclude pre-existing conditions.
A bargain premium that covers almost nothing is not a bargain.
The smartest move is to compare before you commit.
Ask HR for the exact COBRA rate, then price marketplace plans the same day.
Check whether your doctors and prescriptions are covered either way.
If you have a spouse with employer coverage, that special enrollment window may be your cheapest path.
You generally have 60 days to elect COBRA, and coverage can be backdated.
If you're healthy and between jobs, a marketplace plan might bridge the gap for less.
Our take: COBRA is a safety net, not a default.
Treat the election letter like a bill you must shop, not a bill you must pay.
Final Thoughts
Spending one afternoon comparing options could save your family hundreds of dollars a month.