When you lose a job, the paperwork that lands in your mailbox often comes with a nasty surprise.
It's called COBRA, and it lets you keep your old workplace health plan for a while.
You usually pay the entire premium yourself, plus a small administrative fee.
New numbers for 2025 show just how painful that can be.
According to the Kaiser Family Foundation, the average annual premium for family coverage at a large employer now tops $26,000.
Under COBRA, workers who were paying maybe $200 a month toward that plan can suddenly face $1,800 to $2,200 a month out of pocket.
It's the full cost the employer used to cover, shifted onto you.
For a household already dealing with a layoff, that bill can rival a mortgage payment.
Many people open the letter, do the math, and quietly decide they can't afford it.
The rules around COBRA are strict but not cruel.
You generally have 60 days from the date you lose coverage to elect it, and you can even wait until you need care to sign up and pay retroactively.
If you let the window close, you're locked out until the next open enrollment or a qualifying life event.
There are cheaper options, and most people don't check them.
Healthcare.gov and state marketplaces offer subsidized plans, and a job loss counts as a qualifying event to enroll outside open season.
If your income drops, you may qualify for premium tax credits that cut the sticker price dramatically.
Medicaid is also an option in many states for lower earners.
Short-term health plans look cheap online, but read the fine print.
They often skip maternity care, mental health, and prescription drugs, and they can deny coverage for pre-existing conditions.
A $90 monthly plan that covers almost nothing is not a bargain when a hospital bill arrives.
Standalone plans can run $30 to $60 a month and may be worth it if you have appointments coming up.
If not, paying cash for a cleaning twice a year is often cheaper than carrying the premium all year.
One practical move: call your HR department before your last day and ask exactly what COBRA will cost.
Then compare it against two or three marketplace quotes the same week.
Doing this while you still have coverage beats scrambling after an emergency.
If you're healthy and between jobs, a high-deductible marketplace plan paired with an HSA can hold costs down.
If you have ongoing prescriptions, check the formulary before you buy anything.
One expensive drug can wipe out the savings of a cheaper premium in a single month.
The bottom line is that COBRA is a safety net, not a default.
It protects people mid-treatment or close to a deductible, and for them it can be worth every penny.
For everyone else, it's usually the most expensive door in the hallway, and there are almost always cheaper ones nearby.
My take: treat that COBRA letter as a starting bid, not a final offer.
Spend one afternoon comparing marketplace plans, Medicaid, and your actual medical needs before you sign anything.
Final Thoughts
The right answer varies by family, but sticking with the first option because it feels familiar is how people overpay by thousands.