The COBRA letter arrives a few weeks after the layoff and it is, reliably, the worst piece of post you get. The figure on it bears no resemblance to the deduction you were used to seeing on a payslip, and the instinct is that something has gone wrong. Nothing has.
Why it costs what it costs
Employer health cover is jointly funded: the employer pays a large share of the premium and the payroll deduction is your share. When the employment ends the employer's share ends with it, and COBRA lets you keep exactly the same plan by paying the whole premium yourself — plus an administrative charge the law permits, capped so the total cannot exceed 102% of the full premium.
So the coverage is unchanged, the doctors are unchanged, the deductible you have already partly met is unchanged. Only the invoice is different, and it is different by the size of the subsidy you never saw.
The election window is the useful part
You generally have sixty days from the later of the loss of coverage or the date of the election notice to elect COBRA, and election is retroactive to the day cover ended. In practice that is a decision you are allowed to defer: you can spend those weeks pricing alternatives, and if something happens that needs the plan, you can still elect and have it apply.
That is a genuine option with real value, and most people do not know they hold it. It does not make COBRA cheap; it makes the deadline much less frightening than the letter implies.
The four alternatives worth pricing
- 1 · The ACA marketplace. Losing job-based cover opens a special enrollment period. Subsidies are based on expected income for the year — and your expected income has just changed considerably, which is exactly when the subsidy is largest. Compare on healthcare.gov or your state's own marketplace.
- 2 · A spouse's or partner's plan. Losing your cover is a qualifying event for their plan too, but that special enrollment window is short — often thirty days — so this is the one to check first rather than last.
- 3 · A short-term policy. Cheaper, and a bridge rather than real cover: pre-existing conditions and essential benefits are commonly excluded. Reasonable for a known short gap, poor as a plan.
- 4 · Medicaid. Eligibility is based on current income rather than last year's, and there is no enrollment deadline — you can apply at any point. Worth checking even if you assume you would not qualify, because the assumption is usually based on the salary you no longer have.
When COBRA is still the right call
If you are mid-treatment, if you have already met a large part of the deductible for the year, if a specialist you need is in that network and not in the marketplace ones, or if a family member's care would be disrupted by a change — COBRA can be the cheapest option even at the full premium, because continuity has a price too.
Also worth asking for: a period of employer-paid COBRA is one of the most commonly granted severance concessions, and it is frequently easier to negotiate than additional weeks of cash.
Put the real number in, not the assumption
Whichever way it goes, the premium becomes a monthly line in your burn, and it is usually the largest new one. Get the actual quote from the plan administrator and an actual marketplace quote beside it, then put the one you choose into the runway rather than an estimate of it — that is the calculation, and this line moves the date more than most of the cuts people agonise over.
General information, not advice. Plans, premiums, windows and eligibility vary; the administrator and the marketplace are the authorities on yours.