COBRA continuation coverage: cost structure and eligibility timeframe

I used to think COBRA was a mysterious acronym only HR folks understood. Then a friend was laid off and called me in a panic: “Do I have to decide today? Why is the number so high?” That phone call sent me down a rabbit hole, and I promised myself I’d write the notes I wish we’d had in that moment—clear, non-hyped, and honest about where the rules leave room for personal choice. Think of this as my journal entry on COBRA: what I learned about how the cost is built, who qualifies and for how long, and the real-life tradeoffs people face when deciding between COBRA and other options.

The one insight that made COBRA’s price finally make sense

COBRA isn’t a new plan—it’s simply your same employer group plan, continued after certain life events. When you were employed, your premium was usually split: your employer paid a chunk and you paid the rest. Under COBRA, you’re typically asked to pay the full cost of that group coverage plus a small administrative fee. That’s why the sticker shock hits. If your employer used to cover $500 of a $650 monthly premium and you paid $150 on payroll, COBRA generally becomes about $663 (i.e., $650 × 102%) instead of $150. The math isn’t a penalty; it’s simply the total cost coming into view.

• Core cost rule: Plans can charge up to 102% of the total premium during the regular COBRA period. In a disability extension (more on that below), some plans can charge up to 150% during months 19–29.
• Same benefits, same network: Deductibles, formularies, and provider networks generally match what you had as an active employee.
• Retroactive coverage is possible: If you elect on time and make the initial payment within the allowed window, coverage can relate back to the day after your group coverage ended.

For the foundational how-and-why, I kept these quick references handy while writing and double-checking details:

• U.S. DOL COBRA overview
• DOL Employee’s Guide to COBRA (PDF)
• HealthCare.gov COBRA & the Marketplace

If you’re skimming, here’s the timeline in plain English

Timelines can feel like an alphabet soup of notices and deadlines. This is how I mapped it out in my notebook so I could see the flow at a glance:

• Qualifying event happens: Common ones include job loss (for reasons other than gross misconduct) or a reduction in hours. For family members, qualifying events also include divorce/legal separation, the covered worker’s death, a child aging out, and certain Medicare timing scenarios.
• Election window opens: You generally have 60 days to elect COBRA. The 60-day clock usually starts from the later of the date coverage would end or the date you receive the COBRA election notice.
• Initial payment deadline: After you elect, you typically have 45 days to make the first payment. That first payment often must cover premiums back to the day after your group coverage ended, so it can feel large.
• Ongoing payments: Once you’re active on COBRA, there’s usually a monthly due date with a 30-day grace period. Plans differ on what “on time” means (e.g., postmark rules), so read the notice carefully.
• Duration: Most beneficiaries get up to 18 months. This can extend to 29 months if the SSA determines a qualified beneficiary had a disability any time during the first 60 days of COBRA. Some dependents may qualify for up to 36 months in certain second events (e.g., divorce, death, a child aging out) and certain Medicare timing situations.

None of this is meant to be ominous. It’s simply a sequence. If you know the sequence, you reduce the chance of missing something that matters.

What counts as COBRA-eligible and who gets how long

COBRA generally applies to employer group health plans from employers with 20 or more employees. (Smaller employers may be covered by a state “mini-COBRA” law—same idea, different details. Your state department of insurance website usually explains the rules.) Within that framework, here’s how I internalized the eligibility basics:

• Covered worker: If you lost your job (other than for gross misconduct) or your hours were reduced, you typically can elect COBRA for up to 18 months.
• Spouse and dependent children: If the worker becomes entitled to Medicare before the job loss, if there’s a divorce/legal separation, if the worker dies, or if a child ages out, dependents generally get up to 36 months (the measurement can vary with Medicare timing). They can also sometimes reach 36 months via a second qualifying event.
• Disability extension: If any qualified beneficiary is determined by the Social Security Administration to be disabled at any time during the first 60 days of COBRA, everyone on COBRA in that family unit may be able to extend from 18 to 29 months—if timely notice is given to the plan.
• Early termination rules: COBRA can end earlier for reasons like nonpayment, the employer ceasing to offer any group health plan, fraud, or enrollment in another group plan after COBRA election (depending on plan rules). Medicare enrollment after electing COBRA can also end your COBRA early, while Medicare entitlement before a qualifying event can affect the dependents’ timeframe.

Whenever I felt myself getting lost in permutations, I’d step back to just two questions: What was the event? and Who is the beneficiary? Answer those, and the timeline usually falls into place.

How the dollars add up each month

Because COBRA is the same plan, your total cost reflects the entire premium your employer and you collectively paid before, plus up to a 2% administrative fee. I found it helpful to write down the actual monthly amount (not just the percentage) and compare it with alternatives:

• Ask HR or the plan administrator for the full monthly premium of the plan you had. Don’t guess; get the real number.
• Check if your budget can absorb it short-term. Remember that the initial payment may include multiple months retroactively.
• Re-run the math if you qualify for a disability extension. Some plans may charge up to 150% during months 19–29.

Taxes also matter. In general, COBRA premiums you pay out of pocket can count as medical expenses for itemized deductions (subject to IRS rules, such as the 7.5% of AGI threshold). If you have an HSA, HSA distributions can typically be used tax-free for COBRA premiums. I keep the IRS pages bookmarked so I’m not guessing at tax time:

• IRS Publication 502 (medical and dental expenses, including health insurance premiums like COBRA)
• IRS Publication 969 (HSAs and what distributions can cover)

Bottom line on cost: COBRA can be pricey, but it preserves continuity of care. That continuity—same doctors, same authorizations—can be worth the premium during a treatment course or a pregnancy. It’s okay if your answer is “keep COBRA for three months while I finish X, then switch.” The rules allow for practical, time-bounded choices if you respect the deadlines.

COBRA versus Marketplace coverage when money is tight

When I compared options, I asked myself: “What do I actually need covered in the next six months, and what can I afford monthly?” The ACA Marketplace offers plans that may include premium tax credits based on your household income. Key realities I jotted down:

• While enrolled in COBRA, you generally can’t receive Marketplace premium tax credits. If you enroll in COBRA and keep it, you pay the full COBRA price even if your income would otherwise qualify for assistance.
• Special Enrollment Periods (SEP) matter. When COBRA coverage ends (e.g., the 18 months run out), that’s a qualifying event for Marketplace enrollment. Simply deciding to drop COBRA mid-year usually does not create a SEP, so in that scenario you may need to wait for the annual Open Enrollment unless another SEP applies.
• Open Enrollment is a safety valve. Each year you can reevaluate, even if your COBRA hasn’t ended.

For quick comparisons and eligibility checks, I like the plain-English summaries at HealthCare.gov since they call out how COBRA interacts with Marketplace timing and subsidies.

My simple decision framework on one page

When I was helping my friend, I drew a three-step box on a sticky note and it stuck with me. It’s not perfect, but it kept us calm:

• Step 1 — Current needs: Do I have ongoing treatments, a pregnancy, rare medications, or established specialists? If yes, continuity can easily outweigh premium savings for a few months.
• Step 2 — Budget check: Can I cover the initial catch-up and monthly COBRA cost for at least 2–3 months without causing a financial crisis?
• Step 3 — Alternatives and timing: What would a Marketplace silver plan cost me after tax credits, and when can I switch without gaps? Am I within the Marketplace SEP window due to my employer coverage loss, or should I plan around Open Enrollment?

One more sanity saver: If you’re leaning Marketplace, request a medication list and doctor list from your providers and verify them against each plan’s formulary and network. A cheaper plan that excludes your meds or specialists can be more expensive in real life.

Small habits that kept me from missing deadlines

I’m not naturally organized, so I tried a few micro-habits while we navigated the paperwork. These helped:

• Create a single “COBRA” folder (physical or digital) and tuck every notice into it. Write the deadlines on the front: election day, initial payment day, monthly due dates, and grace period end dates.
• Set two calendar reminders for each payment: one a week early to move money, one on the due date to actually pay.
• Confirm the plan’s “on-time” rule (e.g., postmark or received-by). If the plan uses postmarks, take a photo of the mailing label and receipt.
• Call once, email once for key questions. A quick phone call clarifies; a short email creates a paper trail.

When I needed to validate a detail, I leaned on official sources rather than blogs (yes, the irony isn’t lost on me): the Department of Labor’s COBRA page for the big picture and the Employee’s Guide for payment and timing fine print.

Moments when I would slow down and double-check

Not everything requires an attorney or a tax professional, but some situations made me pause.

• Disability timing: If someone in the family was disabled during the first 60 days of COBRA, the extension rules and notice deadlines really matter. That’s when I reread the DOL guide slowly.
• Medicare coordination: The interplay between Medicare entitlement and COBRA can change how long dependents get. If that’s on the table, I’d call the plan administrator and confirm in writing.
• Mini-COBRA states: If your employer has fewer than 20 employees, your state’s rules may apply. The idea is similar, but durations and procedures vary.
• Marketplace swaps: If you’re timing a move from COBRA to Marketplace, verify your SEP dates on HealthCare.gov to avoid a gap.
• Tax questions: If deductibility or HSA rules will make or break your budget, I’d read the relevant IRS page and consider asking a tax pro.

What I kept and what I chose to let go

After all the reading, here are the three principles I bookmarked for myself:

• Continuity has value. If you’re in active treatment, paying for the same network and authorizations may be the safest short-term move.
• Deadlines are friendly guardrails. They look strict, but they’re also predictable. Put them on a calendar and they’ll protect you from accidental losses.
• It’s not all-or-nothing. You can use COBRA for a season and then pivot at Open Enrollment or when a SEP opens. Planning beats perfection.

And because I promised myself to always link back to real sources, here’s a tiny “bookmark bar” you can copy into your notes:

• DOL COBRA overview
• DOL COBRA Guide (PDF)
• HealthCare.gov on COBRA & Marketplace
• IRS Pub 502
• IRS Pub 969

FAQ

1) How much does COBRA usually cost?
Answer: Typically up to 102% of the plan’s full premium (what you and your employer together paid), and up to 150% during a disability extension in months 19–29. Ask your plan administrator for the exact dollar amount so you can budget precisely.

2) How long do I have to elect and pay?
Answer: You generally get 60 days to elect COBRA. After you elect, you usually have 45 days to make the initial payment (which may include retroactive months). Subsequent monthly payments typically have a 30-day grace period. Your election notice will show the exact dates.

3) Can I switch from COBRA to a Marketplace plan later?
Answer: Yes, but timing matters. When COBRA ends, that’s a Special Enrollment Period for Marketplace coverage. Voluntarily dropping COBRA mid-year usually doesn’t create a SEP, so you might need to wait for Open Enrollment unless another qualifying event applies. While on COBRA, you generally can’t get Marketplace premium tax credits.

4) Does COBRA include dental and vision?
Answer: If your employer plan included dental or vision, COBRA typically lets you continue those too. Some people choose to keep medical but drop ancillary coverage to manage costs—just be mindful that changes can be limited to what the plan allows.

5) My company has fewer than 20 employees. Do I still get COBRA?
Answer: Federal COBRA generally applies to employers with 20+ employees. Smaller employers may be covered by state “mini-COBRA” laws with similar concepts but different timeframes and procedures. Check your state’s department of insurance website or ask your plan administrator which rules apply.

Sources & References

• U.S. Department of Labor — COBRA Overview
• DOL — An Employee’s Guide to Health Benefits Under COBRA (PDF)
• HealthCare.gov — COBRA and the Marketplace
• IRS — Publication 502 (Medical and Dental Expenses)
• IRS — Publication 969 (HSAs and Other Tax-Favored Health Plans)

This blog is a personal journal and for general information only. It is not a substitute for professional medical advice, diagnosis, or treatment, and it does not create a doctor–patient relationship. Always seek the advice of a licensed clinician for questions about your health. If you may be experiencing an emergency, call your local emergency number immediately (e.g., 911 [US], 119).