Then the health insurance bill arrives, and it stings worse.
If you have ever priced COBRA continuation coverage, you already know the number can look less like a monthly bill and more like a second rent payment.
Under COBRA, you generally pay the full premium yourself — the part your employer used to cover plus your old payroll deduction.
During open enrollment season, KFF's annual survey of employer health benefits has repeatedly found that annual premiums for family coverage run north of $25,000, with employers covering roughly three-quarters of that.
Lose the job and that subsidy evaporates.
A family that paid $500 a month at work can face $1,800 to $2,200 a month to keep the same plan.
That gap lands in the middle of the worst possible month.
Groceries are up double digits from a few years ago.
Credit card balances are near record highs, and the average card APR has hovered around 20% or more, so carrying a COBRA bill on plastic gets expensive fast.
Federal COBRA generally gives you 60 days to elect coverage and 45 days after that to pay the first premium, which helps — but it also means a family can owe several months at once if they wait.
There are off-ramps worth checking before you write that check.
If you lost job-based coverage, you usually qualify for a special enrollment period on the Affordable Care Act marketplace, where subsidies are based on your projected income for the year — and a layoff year often means a much smaller income.
For many households, a marketplace silver plan with subsidies costs hundreds less per month than COBRA for comparable coverage.
Medicaid may be an option in states that expanded it.
Spouse coverage and short-term plans exist too, though short-term policies often exclude pre-existing conditions and essential benefits, so read the fine print.
Timing matters more than most people realize.
You can typically enroll in a marketplace plan up to 60 days after losing coverage, and coverage usually starts the first of the following month.
COBRA can also be elected later and retroactively, so some families use it as a bridge while they shop.
One catch: once you enroll in a marketplace plan, you generally cannot go back and elect COBRA for the same loss of coverage.
The practical move is boring but effective.
Before you pay anything, price three things: COBRA, a subsidized marketplace plan, and a spouse's plan if that exists.
Check whether your doctors and prescriptions are covered under each.
Then compare the real monthly number against your severance, savings, and unemployment income.
Our take: COBRA is a safety net, not a default.
It protects continuity of care when you need it most, but treating it as the automatic choice can drain savings you will want later.
Final Thoughts
Spend 30 minutes on Healthcare.gov or with a navigator before the first bill is due — that half hour can be worth thousands.