Then the COBRA letter arrives, and the real number shows up: the full premium your employer used to split with you, plus a 2% administrative fee on top.
For a family on a typical employer plan, that can run $1,400 to $2,200 a month in 2025, according to KFF's annual employer benefits survey.
A single person often faces $600 to $800.
That is not a typo, and it is not negotiable — COBRA rules let the plan charge you the entire cost.
The sticker shock is the point of this article, because most people only discover it after they have already lost the income that made it affordable.
Your paycheck deduction of, say, $180 per pay period felt manageable because your employer was quietly covering the other 70% or more.
It just hands you the whole thing and adds a service charge for the paperwork.
That 2% fee sounds trivial until you do the math on a $1,800 monthly premium.
It is $36 a month, or $432 a year, for the privilege of keeping coverage you already had.
Marketplace plans are not automatically cheaper, but they frequently are, and they come with subsidies based on your new, lower income.
The catch that trips people up: if you decline COBRA, you generally cannot change your mind later and enroll mid-year.
You get a 60-day window from the date coverage would end, and that is it.
Miss it and you may be locked out until the next open enrollment.
The employer gets to say it offers continuation coverage without paying a dime toward it.
Insurers collect the full freight from people who are often too sick or too scared to shop around.
There is a real argument for COBRA if you have ongoing treatment, an expensive prescription, or doctors you cannot easily replace.
Switching plans mid-treatment can mean new networks, new prior authorizations, and new denials.
Sometimes paying the painful premium is the rational move.
But for a lot of people, the smarter play is to price the alternatives in the same week the letter arrives.
Healthcare.gov runs a subsidy calculator, and a special enrollment period is triggered by job loss.
State exchanges often beat the federal marketplace on price, so check both if you live somewhere with its own system.
One more trap worth flagging: short-term health plans and health-sharing ministries often market themselves as COBRA replacements.
They can deny claims for pre-existing conditions, cap payouts, and refuse to cover things a real plan must.
The low premium is not a discount, it is a different product.
If the COBRA number genuinely does not fit your budget, call the plan administrator and ask about payment plans before you walk away.
Many will not, but the call costs nothing.
Opinion: COBRA is less a safety net than a bill with a friendly name, and the 2% fee on top of an already brutal premium is a small insult that adds up.
Final Thoughts
Shop the marketplace before you assume you have no choice, because the letter is designed to make quitting feel impossible.