Let’s be honest: the first thing you’ll notice about COBRA is the price. Once your company’s contribution disappears, the sticker shock is very real. While it’s a great way to keep your exact same health plan and doctors, that high cost means it isn’t always your best move. Understanding how does COBRA insurance work is the first step. But the second is comparing it to other, more affordable options, like plans on the Health Insurance Marketplace. This guide will walk you through both sides so you can make the right choice for your situation.

Key Takeaways

• COBRA is a continuation, not a new plan: It allows a former employee to keep their exact same health coverage, but they become responsible for paying the full premium—including the portion your company previously covered—plus a small administrative fee.
• Timelines are everything: You have a specific window to notify your plan administrator of a qualifying event, which then gives the employee a 60-day period to elect coverage. Staying on top of these deadlines is crucial for compliance and ensuring a smooth transition.
• Always point to the alternatives: Due to its high cost, COBRA isn’t always the best fit. Inform departing employees that losing job-based coverage opens a Special Enrollment Period on the Health Insurance Marketplace, where they can often find more affordable plans.

What is COBRA Insurance?

If you offer group health insurance, you’ve likely heard of COBRA. But what exactly is it? Think of it less as a type of insurance and more as a federal law that lets employees hang on to their health plan after leaving your company. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a law designed to provide a temporary safety net for workers and their families. It ensures they don’t face a sudden gap in coverage after a major life event, like a job change or layoff.

For your business, understanding COBRA is a key part of benefits administration. It’s not a new plan you have to find for former employees; it’s a federally mandated option for them to continue the exact same group health benefits they had while employed. This includes medical, dental, and vision plans. The key difference is who pays for it. Instead of sharing the cost, the former employee is now responsible for the entire premium, plus a small administrative fee. As an employer, your role shifts from contributor to facilitator, ensuring the proper notices are sent and the process runs smoothly. We can help you get started with a system that makes this process seamless.

Why Was COBRA Created?

COBRA was passed in 1986 to solve a serious problem: people losing their health insurance the moment they lost their job. Imagine an employee needing medical care during a transition between jobs or after being laid off. Without a safety net, they and their family would be completely exposed to high healthcare costs. COBRA acts as a bridge, giving them the right to continue their existing group health plan for a limited time.

This law provides stability during uncertain times, covering situations like voluntary or involuntary job loss, a reduction in work hours, divorce, or death. By allowing individuals to maintain their familiar health plan, they can keep their doctors and continue necessary treatments without interruption. It offers peace of mind and financial protection when it’s needed most.

Who Does COBRA Protect?

COBRA protects employees and their covered family members who lose access to your company’s health plan due to a specific “qualifying event.” These events trigger the option for COBRA coverage. For an employee, this could be leaving their job (voluntarily or not) or having their hours reduced. For a spouse or dependent child, qualifying events include the employee’s death, divorce or legal separation from the employee, or the employee becoming entitled to Medicare. If your company offers group health insurance for small businesses in Washington, COBRA ensures that even after such events, employees and their families can maintain their coverage temporarily.

It’s important to note that while the law provides access, the individual pays the full cost. The U.S. Department of Labor allows former employees to be charged up to 102% of the plan’s premium—the full cost plus a 2% administrative fee. This makes it a pricey option, but for many, it’s a crucial one for maintaining continuous health coverage.

Who Qualifies for COBRA?

COBRA coverage isn’t a given for every employee who leaves a job. Eligibility depends on a few specific factors: the size of your company’s health plan, the employee’s situation, and the reason for their change in status. As an employer, understanding these rules is the first step in managing your responsibilities and guiding your team through transitions. The law is designed to provide a temporary safety net, but only for specific people in specific situations. Let’s break down who exactly makes the cut.

Which Employers Are Subject to COBRA?

Not every business is required to offer COBRA. The main determining factor is your company’s size. Generally, COBRA applies to private-sector companies and state or local governments that offered a group health plan and employed 20 or more employees on more than 50% of its typical business days in the previous calendar year. This isn’t just about your full-time staff; part-time employees are also counted, though on a fractional basis. For example, two employees who each work half-time are counted as one full-time employee. If your business is part of a larger group of companies under common control, you must count all employees across all related entities to see if you meet the 20-employee threshold. The U.S. Department of Labor provides detailed rules, but figuring this out is a common hurdle we help our clients clear to ensure they remain compliant.

Which Employees Are Eligible?

For an employee to be eligible for COBRA, they must have been enrolled in your company’s group health plan on the day before the event that caused them to lose coverage. This applies to plans at private-sector companies with 20 or more employees. So, if you run a small group or a larger business, COBRA rules are likely part of your world. The key is that the employee was an active participant in the plan. They can’t opt for COBRA if they weren’t already covered. It’s a continuation of existing benefits, not a chance to enroll for the first time after leaving.

What’s Considered a Qualifying Event?

An employee can only elect COBRA after experiencing a specific “qualifying event.” These are the triggers that cause a loss of health coverage. For an employee, the most common events are a voluntary or involuntary termination of employment (for any reason other than “gross misconduct”) or a reduction in their work hours that makes them ineligible for benefits. It’s important to note that these life changes are what open the door to COBRA. Without one of these official events, an employee can’t simply choose to continue their coverage after leaving their job.

Does COBRA Cover Family Members?

COBRA protections extend beyond the employee to their family members, who are considered “qualified beneficiaries” if they were covered under your plan. A spouse and dependent children can elect COBRA coverage, even if the employee chooses not to. Their own qualifying events include the death of the covered employee, divorce or legal separation from the employee, or the employee becoming entitled to Medicare. Additionally, a dependent child losing their status under the plan’s rules (like turning 26) is also a qualifying event, allowing them to continue coverage on their own.

Coverage for Spouses, Former Spouses, and Dependents

COBRA’s protections don’t stop with the employee; they extend to their family members as well. Spouses and dependent children covered under your plan are considered “qualified beneficiaries,” and they have their own independent right to elect COBRA. This means that even if the former employee declines coverage, their family can still choose to continue it. This is a critical detail for ensuring continuity of care during major life transitions. The qualifying events for family members are specific and include the death of the covered employee, divorce or legal separation, or the employee becoming entitled to Medicare. According to the U.S. Department of Labor, a dependent child losing their status—for instance, by turning 26—also qualifies them to continue coverage on their own.

How Does COBRA Enrollment Work?

The COBRA enrollment process is a series of time-sensitive steps that involve you, your former employee, and your insurance carrier. Staying on top of these deadlines is crucial for compliance and ensuring a smooth transition for your team members. Think of it as a clear, three-part relay race where each handoff is just as important as the last. When you understand your role and the timelines involved, you can manage the process confidently and avoid any compliance missteps.

Notifying Employees: Your Responsibilities

As the employer, your first responsibility is to inform your group health plan about the qualifying event. You have 30 days from the event (like an employee’s termination or reduction in hours) to do this. Once the plan is notified, it must then provide the employee with an election notice. The U.S. Department of Labor is very clear that employers and health plans must tell employees about their right to choose COBRA coverage. From the date of the qualifying event, you have a total of 44 days to ensure the employee receives their official COBRA notice, so timely communication with your plan administrator is key.

Understanding Notification Deadlines

When it comes to COBRA, the clock starts ticking the moment a qualifying event occurs. You have a 30-day window from an employee’s termination date or reduction in hours to notify your health plan administrator. The administrator then has 14 days to send the official COBRA election notice to the former employee. This gives you a total of 44 days from the event date to ensure the notice is in their hands. Once they receive it, the ball is in their court—they have 60 days to decide whether to elect coverage. Meeting these deadlines is not just good practice; it’s a legal requirement. This is where having a dedicated partner can make all the difference, as we can help you manage these critical steps and ensure your business remains compliant without the administrative headache.

Understanding the 60-Day Election Window

Once your former employee receives the COBRA election notice, a new clock starts ticking for them. They have a 60-day window to decide whether to enroll in COBRA coverage. This period, known as the election window, gives them time to weigh their options without feeling rushed. The 60 days begin on the date the notice is provided or the date their health coverage ended, whichever is later. It’s important for them to know that if they waive coverage during this window, they can still change their mind and elect COBRA coverage as long as they are still within the 60-day period.

What Paperwork Do You Need?

The official “election notice” sent to the employee contains all the essential information and forms they need to sign up. This notice explains the cost, where to send payment, and how to enroll. Your main job is to make sure you’ve notified your insurance company of the qualifying event. After you’ve done that, the insurance company takes over and sends the necessary paperwork directly to the employee. This process ensures the employee gets everything they need to make an informed decision, and it keeps the administrative burden on your end focused on that initial, critical notification step.

How Much Does COBRA Cost?

One of the biggest hurdles for a departing employee is the cost of COBRA. While it’s a fantastic safety net, the price can come as a shock. As an employer, your role is to provide the necessary information so your former team members can make an informed decision. The primary reason for the high cost is simple: the employer’s contribution is gone. The former employee is now responsible for the entire premium, which can be a significant financial adjustment. Helping them understand the breakdown of these costs and the payment timelines is a crucial part of the offboarding process.

How to Calculate COBRA Premiums

When an employee is on your group plan, your company typically pays a large portion of their monthly health insurance premium. Under COBRA, the former employee is responsible for paying the full amount. This includes the part they used to cover through payroll deductions and the contribution your company was making on their behalf. On top of that, the plan administrator can charge an additional 2% fee to cover administrative costs. This means the total COBRA premium can be up to 102% of the plan’s cost. It’s essential to clearly communicate this shift in financial responsibility so there are no surprises when they receive their first bill.

A Real-World Cost Example

Let’s put this into perspective with a simple example. Imagine the total monthly premium for an employee’s health plan is $800. While they were employed, your company generously covered half of that cost, so you paid $400, and the employee paid $400 through their payroll deduction. When they opt for COBRA, they become responsible for the entire $800 premium. But it doesn’t stop there. The law allows for a 2% administrative fee to be added. So, their new monthly cost would be $800 plus that 2% fee ($16), bringing their total to $816 per month. This is more than double what they were used to paying, which is why the sticker shock is so common. Clearly explaining this calculation is a key part of managing the COBRA process for departing employees.

Managing COBRA Payments and Deadlines

After a qualifying event, a former employee has a 60-day window, known as the election period, to decide whether to enroll in COBRA. If they choose to enroll, their coverage is retroactive to the date their employer-sponsored plan ended, ensuring there’s no gap in coverage. This is a critical detail to explain. For example, if they wait until day 50 to sign up, they will still owe premiums for the entire period since their coverage ended. They can’t just start paying from the day they enroll. As their former employer, your responsibility is to notify the plan administrator, who will then send the election notice and payment information to the individual. We can help you streamline this entire process and ensure all notifications are handled correctly.

COBRA and Marketplace Subsidies

This is a critical piece of information to share with departing employees: if they enroll in COBRA, they generally can’t get financial assistance through the Health Insurance Marketplace. Because COBRA is considered qualifying health coverage, it makes them ineligible for the tax credits that lower monthly premiums for Marketplace plans. Losing job-based insurance triggers a Special Enrollment Period, giving them a window to explore these other options. It’s essential they compare costs during this time, because many people find more affordable plans on the Marketplace, especially if their income has changed. The best course of action is to evaluate Marketplace plans and potential subsidies *before* the 60-day COBRA election window closes, as it’s their main opportunity to secure a more budget-friendly option.

How Long Does COBRA Last?

One of the most common questions employers and former employees have is about the duration of COBRA coverage. The answer isn’t a single number; it depends entirely on the “qualifying event” that triggered eligibility in the first place. While there’s a standard timeframe, certain circumstances can extend or shorten the coverage period. Understanding these timelines is crucial for managing your responsibilities and providing clear information to your departing team members.

The 18-Month Standard Coverage Period

For the most common qualifying events—voluntary or involuntary termination of employment (for reasons other than gross misconduct) or a reduction in hours—the maximum coverage period is 18 months. This is the timeline most of your former employees will fall under. This 18-month window is designed to provide a substantial buffer, giving individuals and their families time to secure new health insurance without experiencing a lapse in coverage. It’s a critical safety net during a period of transition, whether they’re starting a new job or exploring options on the marketplace. You can find more details on the Department of Labor’s website.

When Can Coverage Last Longer Than 18 Months?

While 18 months is the standard, certain situations can extend COBRA coverage up to a maximum of 36 months. These extensions typically apply to dependents who lose coverage. For example, if the qualifying event is the death of the covered employee, divorce or legal separation, or a dependent child losing their status under the plan’s rules, the spouse and children can receive up to 36 months of coverage. Additionally, a disability extension is possible. If a qualified beneficiary is determined to be disabled by the Social Security Administration within the first 60 days of COBRA, they may qualify for an 11-month extension, for a total of 29 months.

Qualifying for the Disability Extension

The disability extension is a specific provision that can add 11 months to the standard 18-month COBRA period, for a total of 29 months of coverage. To qualify, a former employee or one of their covered family members must be determined disabled by the Social Security Administration (SSA). The timing here is critical: this determination must be made within the first 60 days of their COBRA coverage. It’s also important to note that the disability must have started before or during that initial 60-day period. Once the SSA determination is received, the individual must notify the plan administrator to secure the 11-month extension. This rule provides crucial extra time for individuals managing a health condition to maintain their coverage.

What Causes COBRA to End Early?

COBRA doesn’t always last for the full 18 or 36 months. Coverage can be terminated early for a few specific reasons, and it’s important for everyone involved to know what they are. The most common reason is failing to pay the premiums on time. Other reasons include the employer ceasing to offer any group health plan, a beneficiary enrolling in another group health plan after electing COBRA, or a beneficiary becoming entitled to Medicare. As an employer, keeping clear records is key. For the former employee, understanding these rules is essential to avoid an unexpected loss of coverage. If you have specific questions, our team is always here to help you find the right answers.

What Does COBRA Cover?

When an employee elects COBRA, they aren’t signing up for a new, government-run health plan. They are simply choosing to continue the exact same group health plan they were enrolled in as an employee. This continuity is the core benefit of COBRA. It means the deductibles, co-pays, and coverage details your former employee was used to will remain the same.

As an employer, your role is to facilitate this continuation. The plan offered under COBRA must be identical to the one available to your current, similarly situated employees. If you make changes to your company’s health plan during open enrollment, those same changes must be offered to your COBRA participants. This ensures they maintain access to the same level of care and benefits as your active workforce, providing a stable bridge during their transition.

Keeping Your Medical, Dental, and Vision Plans

COBRA’s reach extends beyond just the primary medical plan. If your company’s benefits package included separate dental and vision plans, a former employee has the right to continue those coverages as well. They can pick and choose which plans to keep. For instance, an employee might decide to continue their medical and dental coverage but drop the vision plan to save on costs. The key is that whatever you offered them as an active employee must be made available for them to continue under COBRA, providing a flexible safety net during their transition.

Are Prescription Drugs Covered?

For many people, consistent access to prescription medication is non-negotiable. COBRA ensures there are no interruptions here. Because the employee is keeping the same health plan, their prescription drug coverage continues just as it was before. The formulary—the list of covered medications—and the associated co-pays or coinsurance remain unchanged. This provides critical peace of mind for anyone managing a chronic condition, as they won’t have to worry about their necessary medications suddenly becoming unaffordable or unavailable.

Can You Keep Your Same Doctor on COBRA?

One of the most significant advantages of COBRA is the ability for individuals to keep their trusted healthcare providers. Since they are staying on the same insurance plan, the network of doctors, specialists, and hospitals they have access to doesn’t change. This is a huge relief, especially for someone in the middle of a treatment plan or for a family that loves their pediatrician. They can continue their care without the disruption of finding new, in-network providers. You can even direct them to your plan’s provider search tool to confirm their doctors are still available.

Are There Alternatives to COBRA?

When an employee leaves, they often face sticker shock from the cost of COBRA. While it’s a valuable option for maintaining the exact same coverage, it’s not the only path forward. As an employer, being aware of the alternatives can help you guide your former team members toward a solution that fits their budget and needs. It’s a compassionate way to manage an employee’s transition and reinforces your reputation as a caring employer.

Knowing these options allows you to point people in the right direction, even after they’ve left your company. Here are the main alternatives to COBRA coverage that your employees can explore.

Exploring the Health Insurance Marketplace

For many people, the most viable alternative is a plan through the Health Insurance Marketplace. Losing job-based health coverage is considered a “qualifying life event,” which opens a 60-day Special Enrollment Period. This means your former employee doesn’t have to wait for the annual open enrollment window to get a new plan. In Washington, they can shop for and compare plans on the Washington Healthplanfinder website. Depending on their income, they may also qualify for tax credits or subsidies that make these plans significantly more affordable than a COBRA premium. It’s a great option for finding flexible coverage that can be tailored to their new circumstances.

Joining a Spouse’s Health Plan

If your departing employee has a spouse with their own employer-sponsored health insurance, this is another excellent alternative to explore. Just like with the Marketplace, losing job-based coverage is a qualifying life event that triggers a Special Enrollment Period. This allows your former employee to be added to their spouse’s group health plan outside of the regular open enrollment season. It’s important they act quickly, as this window is typically only 30 or 60 days from the date they lost coverage. For many families, this is a far more affordable route than paying the full COBRA premium, especially if the spouse’s employer contributes a significant amount toward the family premium. It’s a practical option that provides quality coverage without the sticker shock.

Considering a Short-Term Health Plan

Think of short-term health plans as a temporary safety net. These plans are designed to bridge gaps in coverage for a limited time, typically from a few months up to a year. They can be a quick and often cheaper solution if someone knows they only need coverage for a short period—for example, while waiting for a new job’s benefits to kick in. However, it’s important to understand their limitations. Short-term plans are not ACA-compliant, meaning they don’t have to cover essential health benefits and can deny coverage for pre-existing conditions. They are best used as a last resort for catastrophic events rather than comprehensive care.

What Short-Term Plans Don’t Cover

It’s crucial to understand that these plans come with significant trade-offs. Because they aren’t required to be ACA-compliant, they don’t have to cover the ten essential health benefits. This means they can legally exclude coverage for things like maternity care, mental health services, and prescription drugs. More importantly, they can deny coverage or charge higher premiums based on pre-existing conditions, a practice that isn’t allowed with COBRA or Marketplace plans. Think of them as a safety net for unexpected accidents or illnesses, not a solution for ongoing or comprehensive healthcare needs. They serve a very specific purpose for a very short time.

Checking Eligibility for Medicaid

If a former employee’s income is low after leaving their job, they might be eligible for Medicaid. In our state, this program is called Washington Apple Health. It provides free or low-cost health coverage to eligible adults, children, pregnant women, and people with disabilities. Eligibility is based on monthly income and household size. For those who qualify, it offers comprehensive benefits with little to no out-of-pocket cost. It’s a critical resource that ensures continuous access to health care for individuals and families facing financial uncertainty during a job transition.

Checking Eligibility for CHIP

For families who may not qualify for Medicaid but find COBRA premiums too high, the Children’s Health Insurance Program (CHIP) is another vital resource. In our state, this program is part of Washington Apple Health for Kids. It provides comprehensive, low-cost health coverage for children up to age 19, covering everything from routine check-ups and immunizations to prescriptions, dental, and vision care. It’s designed for families with incomes too high for Medicaid but too low to afford private insurance. A key benefit is that families can apply at any time of the year, and coverage can begin immediately upon approval, preventing any gaps in care for their children.

Common COBRA Mistakes to Avoid

Navigating the end of an employment relationship has its complexities, and helping your team members understand their health insurance options is a great way to ensure a smooth transition. While COBRA provides a valuable safety net, employees can easily run into a few common pitfalls. By being aware of these potential mistakes, you can provide clearer guidance and support to your departing staff, helping them make the best decision for their situation. The three biggest areas where people get tripped up are missing deadlines, underestimating the true cost, and not realizing they have other choices.

Avoiding Missed Deadlines

One of the most critical aspects of COBRA is the timeline. Former employees have a 60-day window to decide whether they want to enroll. It’s important to communicate that this isn’t a free trial period. If they wait until day 59 to sign up, their coverage is retroactive to their last day of employment. This means they’ll be on the hook for paying the premiums for the two months they were covered, all at once. Clearly explaining this can prevent sticker shock and ensure they don’t miss their opportunity to secure continuous coverage if they need it. Managing these communications is a key part of our expert guidance.

Failing to Budget for the Full Cost

The price of COBRA is often a surprise for former employees. They are now responsible for paying the entire premium—both the portion they used to contribute and the larger share your company covered. On top of that, an administrative fee of up to 2% can be added. This can make the monthly cost significantly higher than what they’re used to seeing on their pay stubs. Helping them understand the full financial picture upfront is essential. This transparency allows them to budget accordingly or decide if they need to explore more affordable alternatives from the start.

Forgetting to Explore Other Options

COBRA feels like the default option, but it’s not the only one. Given the high cost, it’s always a good idea for employees to see what else is out there. A qualifying life event, like losing a job, opens a special enrollment period on the state’s health insurance marketplace. They might find a plan through the Washington Healthplanfinder that offers similar coverage at a lower price, possibly with the help of subsidies. Encouraging your departing employees to compare their COBRA offer with marketplace plans ensures they make a fully informed choice that best fits their family’s needs and budget.

What’s Next After COBRA Ends?

COBRA is designed to be a temporary bridge, not a long-term destination for health coverage. When an employee’s COBRA eligibility is about to run out, it’s important they have a clear path forward to avoid any gaps in their insurance. While your legal obligation may be fulfilled, offering guidance on the next steps is a great way to support former team members during a critical transition. Understanding their options helps them make informed decisions for themselves and their families, ensuring they land on their feet with the right coverage.

How to Use a Special Enrollment Period

Normally, people can only sign up for a new health insurance plan during the annual Open Enrollment Period. However, losing health coverage—including when COBRA ends—is considered a “qualifying life event.” This event triggers a Special Enrollment Period (SEP), which is a 60-day window that allows an individual to enroll in a new plan through the Health Insurance Marketplace. This is a crucial piece of information to share. It ensures a former employee knows they have a dedicated opportunity to find new coverage and won’t have to wait until the next open enrollment cycle, which could be months away.

The Risk of Ending COBRA Coverage Early

It can be tempting for a former employee to drop their COBRA coverage early, especially with the high monthly premiums. However, it’s crucial they understand the risk involved. Voluntarily ending COBRA coverage is generally *not* considered a qualifying life event. This means if they decide to cancel their plan, they usually can’t just switch to a Marketplace plan. Instead, they may have to wait until the next Open Enrollment period, potentially leaving them uninsured for months. This is a significant gamble. The only time it’s safe to end COBRA early is if they’re enrolling in another group health plan, like from a new employer. It’s a detail that can make all the difference in maintaining continuous coverage.

Moving to an Individual Health Plan

The most common path after COBRA is moving to an individual health plan. This often involves exploring options on the state’s Health Insurance Marketplace. While COBRA continues the exact same group plan, an individual plan can be tailored to a person’s current needs and budget. It’s a chance to find a policy that might be more affordable or a better fit. A key step in this process is using a provider search to confirm that their preferred doctors and hospitals are in-network with any new plan they consider. This prevents unexpected out-of-pocket costs and ensures continuity of care.

How to Help Employees Plan for What’s Next

You can help your former employees by encouraging them to plan ahead. Remind them that COBRA is a temporary solution meant to prevent a coverage gap during a time of change. As their coverage period nears its end, you can provide them with resources about the Special Enrollment Period and direct them toward the marketplace. This simple act of support can make a huge difference. By equipping them with the right information, you empower them to compare the costs and benefits of their options before their COBRA coverage expires, making for a much smoother and less stressful transition. If they need expert, one-on-one guidance, speak with a Washington benefits advisor that is always ready to help them get started.

Related Articles

• How to Get COBRA Insurance: A Simple Guide
• How Long Does COBRA Last? Your Timeline Explained
• What is COBRA Health Insurance? A Simple Guide
• COBRA Medical Insurance: Your Complete Guide – Washington Health Insurance Agency

Frequently Asked Questions

As a small business, am I required to offer COBRA? Generally, COBRA rules apply to private-sector companies that offer group health plans and have 20 or more employees. If your business has fewer than 20 employees, you are typically exempt from the federal COBRA law. However, Washington State has its own continuation coverage laws that may apply to smaller groups, so it’s always a good idea to confirm your specific obligations.

What happens if a former employee misses a COBRA payment? Once an employee enrolls and makes their first payment, there is usually a grace period for subsequent monthly payments, which is often 30 days. If they fail to make a payment before the grace period ends, their coverage can be terminated permanently. They won’t have another chance to re-enroll, so stressing the importance of timely payments is key.

Can an employee choose a different, cheaper health plan from my company when they elect COBRA? No, COBRA is not a new enrollment opportunity. It is a law that allows a former employee to continue the exact same health plan they were enrolled in on their last day of work. They can’t switch to a different plan you offer. The only time they could change plans is if your company holds its annual open enrollment and you offer different options to all active employees. In that case, COBRA participants must be given the same choices.

Why would anyone choose expensive COBRA over a Marketplace plan? While the cost is high, COBRA offers total continuity, which can be priceless in certain situations. If someone has already met their annual deductible, starting a new Marketplace plan would reset it to zero. Others may be in the middle of a specific treatment with a trusted doctor and want to avoid switching providers or networks. COBRA guarantees they can keep their exact plan, doctors, and prescription coverage without any interruption.

Does COBRA coverage start from the day the employee signs up? No, and this is a common point of confusion. If an employee elects COBRA, their coverage is retroactive to the date they lost their employer-sponsored benefits. This ensures there is no gap in their health coverage. However, it also means they are responsible for paying the premiums for that entire period, even if they wait until the end of their 60-day election window to sign up.