When the pink slip arrives, the severance math usually looks survivable.
Then the COBRA paperwork shows up, and a lot of Americans discover the real price of keeping their old health plan.
COBRA lets you stay on your former employer's health insurance for up to 18 months in most cases.
The catch: you now pay the full premium yourself, plus a 2 percent administrative fee.
According to KFF's 2024 Employer Health Benefits Survey, annual premiums averaged $8,951 for single coverage and $25,572 for family coverage.
Divide the family figure by 12 and you're staring at roughly $2,131 a month — for insurance you already had.
A worker who paid $400 a month toward a family plan could face a bill five times larger the month after a layoff.
For many households, that single expense rivals a mortgage payment.
There's a small mercy built into the system.
If you lose coverage because of a layoff, you generally get a 60-day special enrollment window to buy a plan on HealthCare.gov.
Depending on your income, subsidies can cut marketplace premiums dramatically — sometimes to a fraction of the COBRA number.
Timing matters because the two options interact.
You can typically enroll in a marketplace plan and still change your mind within 60 days, since COBRA elections can be reversed.
That flexibility is worth using rather than rushing.
A few practical moves can soften the blow.
Compare the full COBRA premium against a marketplace plan's premium plus deductible plus out-of-pocket maximum, not just the monthly number.
If you have ongoing treatment, check whether your doctors and prescriptions stay in network.
Short-term plans look cheap online but often exclude pre-existing conditions and cap benefits, so read the fine print before trading real coverage for a low sticker price.
If your income drops sharply, estimate it carefully when applying for subsidies — a realistic projection can unlock significant savings.
Employers with 20 or more workers generally must offer COBRA.
Smaller companies may fall under state mini-COBRA rules with different timelines and costs, so check your state's insurance department if the federal law doesn't apply.
One more wrinkle: you usually have 60 days from the coverage notice to elect COBRA, and the plan can bill you retroactively for that period.
Some people use the window as a bridge, then switch once a marketplace plan kicks in.
None of this is pleasant, but doing the math before the deadline beats defaulting into the most expensive option.
A few hours with a calculator and a marketplace comparison can be worth thousands of dollars over a year.
Our take: COBRA was designed to protect continuity, not your wallet, and it shows.
Final Thoughts
Treat it as one option among several, not a reflex — because the plan that felt like a safety net at work can feel like a trap once you're paying the whole bill.