For millions of Americans who get laid off each year, COBRA is the first option they hear about, and often the worst one they can afford.
The program lets you keep your employer's health plan for up to 18 months after leaving a job.
Here's the number that stops people cold: the average family premium for employer-sponsored coverage hit $26,993 in 2024, according to KFF's annual survey.
Under COBRA, you pay nearly all of it yourself, plus a 2% administrative fee.
That's roughly $2,300 a month for a family, or around $27,500 a year, for coverage you used to split with your boss.
The average annual premium for individual coverage was $8,951.
On COBRA, that's about $760 a month, up from the $100 to $200 many workers were used to seeing deducted from a paycheck.
A laid-off worker collecting unemployment in most states brings in $300 to $500 a week, or roughly $1,300 to $2,200 a month.
A single COBRA premium can swallow more than half of that.
This is why KFF research has found that only a small share of eligible people actually enroll, and many who do drop out within months.
There are a few escape hatches worth knowing.
The Affordable Care Act marketplace is the big one.
Losing job-based coverage qualifies you for a special enrollment period, and enhanced subsidies have made many marketplace plans far cheaper than COBRA.
A 40-year-old earning $45,000 could qualify for a benchmark silver plan for well under $400 a month in many states, and often less.
For some households, the gap between COBRA and a subsidized marketplace plan runs into the thousands per year.
Timing matters, and this is where people get burned.
You generally have 60 days from losing coverage to elect COBRA, and 60 days to pick a marketplace plan.
Miss both windows and you can be locked out until the next open enrollment, unless you qualify for another special period.
If you're mid-treatment, switching plans can mean new networks and new referrals.
If you elect it within the 60-day window, coverage backdates to the day your old plan ended.
That means you can wait, see if you need care, and sign up later if something happens.
Some financial advisers suggest treating that window as a short-term safety net while you shop the marketplace.
COBRA lets you keep those too, but each carries its own premium, and those add up quickly.
The bottom line for anyone staring down a layoff: don't default to COBRA just because the paperwork shows up first.
Run the marketplace numbers, check subsidy eligibility, and confirm whether your doctors are in network before you commit.
The difference can be a car payment or a mortgage payment every single month. **Our take:** COBRA was designed as a bridge, not a destination, and for most households it's now priced like a luxury product.
The real failure here is informational — too many people enroll out of panic before checking a marketplace quote that could save them thousands.
Final Thoughts
If you lose a job this year, spend one hour comparing plans before you sign anything.