COBRA lets you keep your employer’s group health plan after you leave or lose eligibility, but you pay the whole premium yourself, plus up to 2% for administration. At 2025 national averages, that works out to about $793 a month for single coverage and $2,294 a month for family coverage.
Key takeaways
- You pay up to 102% of the full premium, the employer’s share and yours, plus 2%. It rises to 150% during a disability extension.
- The jump is the employer’s contribution going away. A worker paying the 2025 average of $6,850 a year toward family coverage, about $571 a month, would owe about four times that on COBRA.
- You have time to decide. At least 60 days to elect, then 45 days to make the first payment, and coverage is retroactive to the day your plan ended.
- Compare before you pay. A spouse’s plan, the marketplace or Medicare can each be cheaper, but the deadlines to switch are short.
What COBRA costs in 2026
COBRA premiums are set by your former employer’s plan, so the only exact answer is on your election notice. National averages give a sense of scale. The 2025 KFF Employer Health Benefits Survey put the average total premium at $9,325 a year for single coverage and $26,993 for family coverage.
| Coverage | Average total premium, per month | COBRA at 102% | Disability extension at 150% |
|---|---|---|---|
| Single | $777 | $793 | $1,166 |
| Family | $2,249 | $2,294 | $3,374 |
Plans renew each year, so 2026 COBRA rates are generally higher than these 2025 averages. Your plan’s rate can also be very different: small groups, older workforces and rich plan designs all cost more. Try our COBRA cost calculator with your own numbers.
Why COBRA feels so expensive
COBRA is rarely more expensive than the plan itself. It feels that way because, while you were working, your employer paid most of the premium and you paid your share pre-tax through payroll. On COBRA you pay the full amount, plus 2%, with after-tax dollars.
| Family coverage example | While employed | On COBRA |
|---|---|---|
| Total premium, per month | $2,249 | $2,249 |
| Employer pays | $1,679 | $0 |
| You pay | $571, pre-tax | $2,294, after tax |
Figures use 2025 KFF averages: $26,993 total family premium, $6,850 of it paid by the worker.
How long COBRA lasts and the deadlines that matter
| Rule | Timing |
|---|---|
| Election period | At least 60 days from the later of the notice date or the date coverage ended |
| First premium | Within 45 days after you elect |
| Later premiums | 30-day grace period for each monthly payment |
| Job loss or reduced hours | 18 months of coverage |
| Disability extension | Up to 29 months, at up to 150% of premium after month 18 |
| Divorce, death of employee, dependent aging off, Medicare entitlement | Up to 36 months for the spouse and dependents |
Federal COBRA applies to employers with 20 or more employees on more than half of their typical business days in the prior year. Michigan has no state continuation, or “mini-COBRA”, law for smaller employers, so employees of a Michigan business with fewer than 20 employees usually move to the individual market or a spouse’s plan instead. See state mini-COBRA coordination for employers with people in other states.
The 60-day window works in your favor
If you elect COBRA within the election period and pay on time, your coverage is reinstated back to the day your plan ended. That means you do not have to pay anything up front. Some people wait: if they stay healthy, they let the window close and owe nothing; if they have a claim, they elect, pay the back premiums and the claim is covered.
This works, but it is not free of risk. Providers may ask for payment at the time of service while your coverage shows as inactive, pharmacies may not fill prescriptions until coverage is reinstated, and missing the 45-day payment deadline ends your rights entirely. Waiting too long can also close the door on other options, below.
Cheaper alternatives to COBRA
- A spouse’s or partner’s employer plan. Losing coverage lets you join their plan mid-year, but you generally must request it within 30 days.
- The marketplace. Losing job-based coverage opens a 60-day special enrollment period. Premium tax credits depend on household income, and the enhanced credits of 2021 to 2025 have expired, so the credit ends above 400% of the federal poverty level. Choosing COBRA and then dropping it mid-year voluntarily does not open a new special enrollment period; running out your full COBRA period does.
- Medicare. If you are 65 or older, COBRA does not protect you from the Part B late penalty. You generally have eight months after your employment or job-based coverage ends, whichever comes first, to enroll in Part B. See COBRA to Medicare transitions.
- A new employer’s plan. Many plans start on the first of the month after hire, and you can drop COBRA once new coverage begins.
If you have a health savings account, you can use it to pay COBRA premiums tax-free, one of the few premiums an HSA can cover.
What employers need to know
Employers can charge the 2% administrative fee but are not required to. Many cover some or all of COBRA premiums as part of a severance package, which can make a separation go more smoothly. Getting the notices wrong is expensive: the IRS excise tax is up to $100 a day per affected person, and a plan administrator can face up to $110 a day for a notice not provided on time, on top of any claims the plan may have to pay.
Our Michigan employer COBRA guide covers the full requirements, and our pages on COBRA notices and elections, premium billing and collection and COBRA administration explain how to keep the process clean.
More plain-English benefits explainers
- What Is an HSA?: health savings accounts, limits and employer rules
- What Is an HMO?: how HMO plans work and who they fit
- What Does EE Mean?: EE, ES, EC and family coverage tiers
- What Is Form 1094-C?: the employer transmittal and the 95% offer test
- What Is Form 1095-C?: the employee statement, its codes and deadlines
- What Is an ASO Health Plan?: how administrative services only, self-funded plans work
- What Is a PBM?: how pharmacy benefit managers make money
- What Is EBSA?: the Department of Labor agency that enforces ERISA
- What Is a Broker of Record Letter?: how to change brokers without changing your plan
- Offering Group Health Insurance With No Employer Contribution: a guide for businesses with 2-50 employees
- Health Insurance for Employees: how Michigan employers set up a group plan
- EAP Benefits for Employees: what an employee assistance program covers
Frequently asked questions
How much does COBRA cost per month?
COBRA costs up to 102% of the full premium for your former employer’s plan. At 2025 national averages that is about $793 a month for single coverage and $2,294 a month for family coverage, though your plan’s rate can be higher or lower.
Why is COBRA so expensive?
While you were employed, your employer paid most of the premium and your share came out pre-tax. On COBRA you pay the entire premium, plus a 2% administrative fee, with after-tax dollars.
Is COBRA coverage retroactive?
Yes. If you elect within the 60-day election period and make your first payment within 45 days of electing, coverage is reinstated back to the date your plan coverage ended.
Is the marketplace cheaper than COBRA?
Often, especially if your income qualifies you for a premium tax credit. Losing job-based coverage gives you 60 days to enroll in a marketplace plan. Voluntarily dropping COBRA mid-year does not create a new enrollment opportunity.
Does Michigan have a mini-COBRA law?
No. Michigan does not have a state continuation law for employers with fewer than 20 employees. Federal COBRA applies to employers with 20 or more employees.
Help for employers on COBRA cost and compliance
CFH Insurance Consultants is an independent employee benefits firm. We are licensed insurance brokers, and for proper coverage of an account we work in teams of five. We help employers price COBRA correctly, structure severance subsidies and keep notices and billing on schedule, and we can show departing employees how COBRA compares with their other options. Start here, call 248.370.8853, or book a 30-minute call.
This article is general information, not tax or legal advice. COBRA rates are set by each plan, averages are from the 2025 KFF Employer Health Benefits Survey, and marketplace eligibility depends on individual circumstances.
