COBRA: How you can keep employer-sponsored health coverage after losing your job

COBRA: Keeping employer-backed coverage after a job change

Let’s talk straight about a common question people have when life throws a curveball: what happens to your health insurance if you lose your job? The answer that often comes up is COBRA. But what exactly is it, and why does it matter? Here’s a clear, friendly breakdown to help you understand the basics—and what options you have in Illinois, where Get Covered Illinois helps people compare coverage options.

What is COBRA, really?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It’s a federal law that gives you a lifeline: the right to keep your employer-sponsored health plan for a limited time after a qualifying event, like losing your job, a reduction in work hours, or certain other changes in employment status. The idea is simple—there’s a bridge between jobs, so you don’t have to go suddenly without health coverage.

Here’s the thing: COBRA isn’t free. When you’re on payroll, your company often pays a portion of your health insurance. Once you’re on COBRA, you’ll usually pay the full premium you would have paid as an active employee, plus a small administrative fee (about 2%). That can feel steep, especially if you’re juggling bills, but the upside is steady access to the same plan you had before, with the same doctors and benefits. It’s a safety net, not a surprise windfall.

Who qualifies for COBRA?

Most people who were covered by a group health plan at work and then experience a qualifying event are eligible to elect COBRA. The main qualifying events include:

• Job loss (including layoff or termination)

• Reduction in hours

• Death of the covered employee

• Divorce or legal separation

• A dependent child aging out of coverage

If you’re the covered employee, or you’re a spouse or dependent who was on the plan, you can generally elect COBRA. If you’re in Illinois, you can still use COBRA, but you’ll be navigating it through a federal program rather than a state-run option. That said, it’s a widely used safety net because it applies nationwide and can be a fit while you regroup or transition.

How long does COBRA last?

Duration matters, especially when you’re trying to plan financially. The standard window is up to 18 months of continued coverage for most qualifying events. There are exceptions that can extend this:

• If a secondary qualifying event occurs during the initial period (for example, you and your spouse both on COBRA while one of you loses coverage again due to a second event), some plans can extend to 36 months.

• A disability determination by the Social Security Administration can sometimes extend the 18-month period by an additional 11 months, making a total of 29 months.

It’s a lot of numbers, but the key takeaway is this: COBRA gives you a finite but real runway to keep seeing the same doctors, keep your current plan design, and avoid a sudden gap in coverage while you sort things out.

How much does COBRA cost, really?

premium costs are the biggest hurdle for many people. The big reality check is this: when you elect COBRA, you’re paying the full cost of the coverage. That’s often the entire premium that the employer-subsidized plan used to cover for you, plus the small admin fee (2%). If your employer contributed a chunk toward your insurance each month, you’ll notice the premium spike—not a little, often quite a bit.

That doesn’t mean COBRA is a bad deal for everyone. For some, especially right after a job loss, it’s preferable to keep the same doctors, hospital network, and medication routines without the bureaucratic maze of new plans. It can be a stable bridge to a new job with new coverage, or a transition while you evaluate alternatives like marketplace options in Illinois.

COBRA vs. other plan types

This is where a lot of confusion sits, so let’s keep it simple and straight.

• POS (Point of Service) plans: These are a type of health plan, usually offering some flexibility about where you receive care and how costs are shared. POS plans are not continuation rights after job loss. They are a way to structure your healthcare cost and access, but they don’t automatically pick up where your employer plan left off when you’re unemployed.

• Indemnity plans: These are another plan structure that pays providers a set rate, and you generally have broad provider access. Like POS plans, indemnity plans don’t provide a formal “continue the same plan after a job loss” mechanism. They’re different flavors of coverage, not bridges across employment gaps.

• Medicare: This is the federal program for people 65 and older, certain younger people with disabilities, or people with specific conditions. Medicare doesn’t offer a direct continuation option for employer-sponsored plans after job loss. It’s a separate system with its own enrollment rules and timelines. That’s something to consider later, if you’re approaching retirement age or qualify for disability benefits.

• The real bridge option: COBRA. It’s designed specifically for maintaining employer-backed coverage after a qualifying event. If you want to stay in the same plan, or at least in a similar network with familiar doctors, COBRA is the natural route to explore first.

A practical note for Illinois residents

Get Covered Illinois helps people weigh their options when life changes, including job transitions. While COBRA is federal, your state marketplace can still be a guide to what other options exist, such as individual plans that might be more affordable or better suited to your new situation. If your income changes, you might qualify for subsidies that could make a marketplace plan more attractive than COBRA. It’s worth weighing the total monthly cost and the network of doctors you need.

If you’re thinking ahead, here are a few practical steps you could take:

• Check your COBRA notice carefully. It will tell you what you’re eligible for, what you must pay, and by when you need to elect coverage.

• Compare the COBRA premium with a Marketplace plan in Illinois. Do the math on premiums, deductibles, copays, and your doctors’ network.

• Consider your timeline. If you expect a new job soon, COBRA might be a good short-term option. If you’re in a longer transition, a marketplace plan with subsidies could lower costs in the medium term.

• Don’t forget about coverage gaps. If COBRA isn’t viable, make sure you understand when you’re losing coverage and have a plan in place to avoid a lapse.

What to expect when you elect COBRA

If you decide that COBRA fits your situation, here’s the typical flow:

• Receive a notice from your former employer or the plan administrator about your COBRA rights.

• Decide whether to elect COBRA within the 60-day window (you usually have 60 days from the date coverage would end or from the COBRA notice, whichever is later).

• If you elect COBRA, you’ll be billed for the premium—often quarterly or monthly—plus the admin fee.

• Pay on time to keep coverage uninterrupted. If you miss a payment, COBRA coverage can be dropped, just like any other policy.

Common questions you’ll hear about COBRA

• Can I keep my exact same plan on COBRA? In most cases, yes. It’s the same plan, but you’re paying the full premium.

• How long can I stay on COBRA? Typically up to 18 months, with possible extensions up to 36 months in certain situations.

• Is there a penalty if I switch away from COBRA later? Not a penalty, but you’ll want to compare costs and coverage so you aren’t back at square one.

• Can my dependents stay on COBRA if I lose coverage? Yes, dependents who were covered can often elect COBRA as well, within the same time limits.

• What happens if I don’t elect COBRA? You can lose access to the employer plan on the date coverage ends. Without a backup plan, you’d risk medical bills if you need care.

A quick mental model to keep things simple

Think of COBRA as a temporary, controlled doorway back to your old insurance network. It’s not a permanent move, but it buys you time to ride out the uncertainty and find a more permanent arrangement without losing access to doctors, medications, and services you already trust. The key trade-off is cost versus continuity. If continuity matters a lot—say you’ve got ongoing treatment, a stable pharmacy routine, or a network of specialists you don’t want to disrupt—COBRA can be worth the price tag for a while.

A few human touches to end on

Life changes fast, and your health coverage should not become one of the fuel-sucking, stress-inducing parts of the equation. It helps to know your options, to ask the right questions, and to map out a plan that keeps you and your family protected while you weather the transition. If you’re in Illinois, take advantage of resources that help you compare plans and pricing in a way that makes sense for your situation. You don’t have to figure it all out alone.

Key takeaways

• COBRA is the federal program that allows you to keep your employer-sponsored health coverage for a limited time after a qualifying event like job loss.

• You typically pay the full premium plus a small admin fee, so costs can be higher than what you paid as an employee.

• Coverage usually lasts 18 months, with possible extensions to 36 months in certain scenarios.

• COBRA is not the same as POS plans, indemnity plans, or Medicare. Those are different kinds of coverage, not continuation rights.

• In Illinois, you can use Get Covered Illinois as a guide to other options, including marketplace plans and potential subsidies, if COBRA becomes too costly.

• If you’re navigating this, remember the 60-day election window and the steps to enroll so you don’t miss the chance to keep your coverage.

If you’re curious about how COBRA might fit into your current situation, a quick chat with a benefits counselor or a familiar insurance advisor can be a big help. They can walk you through the numbers, explain eligibility specifics, and help compare COBRA with marketplace plans. After all, it’s not just about avoiding medical bills today; it’s about keeping you on solid footing as you move forward with confidence.