COBRA insurance is expensive for most people, and the reason is simple: you pay the full cost of your health plan, including the portion your employer used to cover. The average worker on an employer plan only sees about 20% of the actual premium on their paycheck. Once you’re on COBRA, you’re responsible for 100% of it, plus a 2% administrative fee. That means your monthly health insurance bill can jump four or five times overnight.
What COBRA Actually Costs
Federal law caps COBRA premiums at 102% of the total plan cost. That “total” includes both what you were paying and what your employer was quietly paying on your behalf. The extra 2% covers administrative expenses. For people on a disability extension (months 19 through 29 of COBRA coverage), the cap rises to 150% of the plan’s total cost.
To put real numbers on this: the average employer-sponsored health plan in 2025 costs $9,325 per year for single coverage and $26,993 for family coverage. At 102%, that translates to roughly $793 per month for an individual COBRA plan and $2,295 per month for a family plan. These are averages. If your employer offered a particularly generous plan, or if you live in a high-cost area, your COBRA premium could be significantly higher.
Why the Price Shock Hits So Hard
When you’re employed, your employer picks up the bulk of your health insurance tab. Bureau of Labor Statistics data from 2025 shows that employers in private industry pay about 80% of single-coverage premiums, leaving workers responsible for just 20%. Government employers cover even more, averaging 87%.
So if you were paying $120 per month from your paycheck for health insurance, that was only a fraction of the true cost. Your employer was paying another $480 or more behind the scenes. On COBRA, you inherit that entire bill. The coverage itself doesn’t change at all. You keep the same plan, same network, same benefits. You just pay dramatically more for it.
For family coverage, the gap is even wider. The average worker contributes about $6,850 per year toward a family plan, but the full plan costs nearly $27,000. Switching to COBRA means going from roughly $571 per month to over $2,295 per month.
How COBRA Compares to Marketplace Plans
One of the most important things to know about COBRA is that it’s not your only option. Losing employer coverage qualifies you for a special enrollment period on the Affordable Care Act marketplace, where plans come with income-based subsidies that can dramatically lower your premium.
COBRA has no subsidies, no tax credits, and no financial assistance of any kind. In fact, being eligible for COBRA actually disqualifies you from receiving premium tax credits on the marketplace if you enroll in it. Marketplace plans, on the other hand, adjust your premium based on your household income. For someone who just lost a job, those subsidies can reduce a monthly premium to a fraction of what COBRA would cost.
The tradeoff is that marketplace plans may not include the same doctors or hospitals as your employer plan. If you’re mid-treatment with a specific provider, COBRA lets you keep that continuity. But if flexibility on providers isn’t a concern, marketplace coverage is often hundreds of dollars cheaper per month.
Small Business Employees May Pay Even More
Federal COBRA law applies to employers with 20 or more employees. If you worked for a smaller company, your state may have a “mini-COBRA” law with different rules. These state-level programs vary widely in duration, coverage, and cost.
Pennsylvania’s mini-COBRA, for example, covers businesses with 2 to 19 employees but allows an administrative surcharge of up to 5% instead of the federal 2%. It also only lasts nine months (compared to 18 months under federal COBRA) and only requires continuation of medical insurance, not dental or vision. Other states have their own versions with different terms. Workers at small firms in states without mini-COBRA laws may have no continuation option at all beyond the marketplace.
Payment Deadlines and Grace Periods
If you do choose COBRA, you have some breathing room on the first payment. After you elect COBRA coverage, you get at least 45 days to make your initial premium payment. Coverage is retroactive to the date you lost your employer plan, so there’s no gap even if you wait to pay.
After that first payment, each subsequent premium has a minimum 30-day grace period past its due date. This means you can technically pay late without immediately losing coverage, though it’s not a strategy to rely on. If you miss the grace period, your COBRA coverage ends permanently and cannot be reinstated.
When COBRA Might Be Worth the Cost
Despite the high price, COBRA makes financial sense in a few specific situations. If you’ve already met your annual deductible or out-of-pocket maximum, switching to a new plan resets those amounts to zero. Sticking with COBRA through the end of the plan year could save you thousands in medical costs if you have ongoing treatment. The same logic applies if you’re pregnant, scheduled for surgery, or managing a chronic condition with providers who aren’t in any marketplace plan’s network.
For people between jobs who expect to have new employer coverage within a month or two, COBRA can also serve as a short bridge. You don’t have to keep it for the full 18 months. You can cancel anytime and, if you’re still within 60 days of losing coverage, enroll in a marketplace plan instead. The key is comparing your actual COBRA premium (which your former employer must disclose in your election notice) against marketplace options before committing.