Then comes the letter that makes thousands of Americans do a double take every month: a COBRA premium notice that can run higher than a mortgage payment.
COBRA, the federal law that lets you keep your employer's health plan after leaving a job, has always been expensive.
But with health care costs climbing and employers passing more of the tab to workers, the sticker shock in 2024 and 2025 is hitting harder than ever.
Here's the math that's tripping people up.
Under COBRA, you pay the full premium yourself, both the part your employer used to cover and your own share, plus a small administrative fee.
According to KFF's annual employer survey, the average family plan now costs over $25,000 a year, with workers typically covering about $6,500 of that and employers picking up the rest.
Once you're on COBRA, that full $25,000 is yours alone.
That works out to more than $2,000 a month for family coverage in many plans.
For a single person, average premiums often land between $700 and $900 a month.
For someone who just lost a paycheck, that's a brutal gap to bridge.
Layoffs have ticked up in tech, media, and finance, and a soft hiring market means longer stretches between jobs.
Workers who once counted on a quick rebound are now facing three or four months of coverage decisions, and COBRA often looks like the safest option even when it's the most expensive.
There is a workaround that many people miss.
If you're eligible for coverage through the health insurance marketplace, you can usually qualify for subsidies based on your income for the year, and losing job-based coverage counts as a qualifying life event.
Those subsidies can cut marketplace premiums dramatically, sometimes to a fraction of what COBRA would cost.
Financial advisors and benefits counselors consistently say it's worth running both numbers before defaulting to COBRA.
You also have a 60-day window after your employer coverage ends to elect COBRA, and in most cases you can enroll retroactively if something happens during that gap.
That gives you some breathing room to compare plans, but it doesn't erase the cost if you ultimately need the coverage.
One more detail that catches people off guard: COBRA generally lasts 18 months for voluntary job loss, but the clock doesn't pause and premiums can rise during that stretch.
Some employers also stop offering COBRA entirely if they shut down or drop the plan, leaving workers to scramble.
Our take: COBRA remains a vital safety net, but treating it as the automatic first choice is a costly mistake.
Final Thoughts
If you lose coverage, spend an afternoon comparing marketplace options and subsidy eligibility before signing the form, because the difference can easily add up to thousands of dollars over a year.