When employees lose job-based coverage, COBRA keeps them technically insured — but at a price that shocks most families. Here's what every employer should understand about continuation coverage, and the better alternatives available today.
Group health insurance is priced on a community-rated pool. When you're employed, the employer absorbs a huge share of the family premium. Under COBRA, you absorb all of it — and family tiers cost dramatically more.
| Coverage Tier | Employer Pays (While Employed) | You Pay (While Employed) | COBRA Monthly Cost | |
|---|---|---|---|---|
| Employee Only | ~$520/mo | ~$180/mo | ~$714/mo | |
| Employee + Spouse | ~$940/mo | ~$380/mo | ~$1,346/mo | |
| Employee + Child(ren) | ~$850/mo | ~$340/mo | ~$1,214/mo | |
| Family (All) | ~$1,280/mo | ~$560/mo | ~$2,600/mo | |
| * Averages based on KFF 2024 Employer Health Benefits Survey. Actual costs vary by plan, region, and employer. COBRA includes 2% admin fee. | ||||
Employers typically cover 73% of employee-only premiums and 60% of family premiums. Under COBRA, that contribution vanishes. You pay every penny of a premium that was designed to be employer-shared.
Group plans charge by tier — Employee Only, +1, +2, Family. Each tier jump adds substantial cost. A family of four can hit the highest tier, which is the most expensive bracket with no negotiating power.
Your employer's group rate is based on the collective health risk of all employees. That pooling benefit disappears under COBRA, which uses the same group rate but removes the subsidy that made it affordable.
ACA marketplace plans and private marketplace options can cover a family for 40–70% less than COBRA — with comparable networks and often richer benefits. Job loss is a Special Enrollment Period event, meaning you can enroll immediately without waiting for open enrollment. We can have you compared and covered in 48 hours.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows employees and their families to continue their employer-sponsored health insurance for a limited period after certain qualifying events — job loss, reduced hours, divorce, or death of the covered employee.
On the surface, it sounds ideal: keep the exact same insurance you had, see the same doctors, no interruption in coverage. But there's a critical detail most employees don't know until they get the bill.
Under COBRA, the employee pays the full premium — both their portion and the employer's contribution — plus a 2% administrative fee. That's the entire cost of the plan, which employers often subsidize heavily during employment.
The average employer covers 73% of the premium while you're employed. The moment you elect COBRA, that subsidy disappears overnight — and your monthly cost can increase by 3–4x immediately.
Employees don't have to default to COBRA. Here are the most cost-effective alternatives we can help navigate — all available immediately upon a qualifying event.
Job loss triggers a Special Enrollment Period — no waiting for open enrollment. ACA plans offer comprehensive coverage with income-based subsidies that can dramatically reduce premiums. Families often save $600–$1,200/month versus COBRA.
✓ Save 40–70% vs COBRAOff-exchange private marketplace plans offer broader network access, fewer restrictions, and competitive pricing. Ideal for individuals who don't qualify for ACA subsidies or need specific specialist access.
✓ Save 25–50% vs COBRAUnderstanding your options helps you and your team make the most of your coverage.
| Feature | Group Plan | ACA Marketplace | COBRA | Private Plan |
|---|---|---|---|---|
| Monthly Cost | LowEmployer shares cost | VariesOnly cheap with subsidy | Very High~$2,100+/month family | CompetitiveOften the lowest overall |
| Network Access | LimitedEmployer picks network | RestrictedHMO/EPO networks | Same networkNo changes allowed | Broad PPOAny doctor, no referrals |
| Enrollment | Annual windowOpen enrollment only | Nov–Jan OEPOr qualifying life event | 60-day windowAfter job loss only | AnytimeNo enrollment window needed |
| Approval | Case by caseDepends on plan & employer | GuaranteedACA-protected, cannot deny | Yes — legal rightAvailable after job loss | Must qualifyUnderwriting required |
| Customization | Employer decidesEmployees get no choice | Standardized tiersBronze/Silver/Gold only | Fixed planNo changes possible | Fully flexibleBuild the plan you need |
| Tax Benefits | Employer deductible+ employee pre-tax | NonePost-tax premiums | NoneFull post-tax cost | Self-employed deduction100% deductible if SE |
Each structure has different advantages depending on your company size, budget, and workforce.
Employer selects and contributes to a group plan. Employees pay a smaller share. Best for teams of 5+ wanting uniform coverage.
Employer reimburses employees tax-free for individual plans they choose themselves. Maximum flexibility, any team size.
For businesses under 50 employees with no group plan. Reimburse employees up to federal limits — all tax-free.
We counsel departing employees, HR teams, and business owners on every option available. Free, no obligation, typically within 24 hours.