Not a mistake, and not a penalty. Your employer was paying most of it and you were seeing the rest. Here is what the same coverage costs elsewhere, the clock you are actually on, and the one move that locks you out until January.
Federal law lets a plan charge a COBRA enrollee up to 102 percent of the full cost of coverage — everything the employer was paying, plus everything you were paying, plus a 2 percent administrative fee. Nothing has been marked up. You have simply been handed the invoice that used to be split.
Put the 2025 KFF employer survey averages against it and the jump is stark:
| Coverage | Average total premium | What you were paying | COBRA at 102% |
|---|---|---|---|
| Single | $9,325 / yr | $1,440 / yr — about $120 a month | about $793 a month |
| Family | $26,993 / yr | $6,850 / yr — about $571 a month | about $2,294 a month |
Premium and worker-contribution averages from the KFF 2025 Employer Health Benefits Survey. The COBRA column is 102% of the total, calculated for illustration — your actual plan cost will differ. There is one more sting: if you are in month 19 or later of a disability extension, the cap rises to 150 percent.
Which is why almost nobody looks at a COBRA notice and thinks it is reasonable. The useful question is not whether it is expensive. It is what the same person can buy somewhere else this week.
Roughly in the order they tend to win. Losing job-based coverage opens a 60-day special enrollment period, which is what makes the first four possible outside of open enrollment.
There is a seventh that is not an alternative but is free money: you can pay COBRA premiums out of an HSA. Insurance premiums are normally not a qualified HSA expense, but continuation coverage is one of the written exceptions, and so is coverage while you are collecting unemployment. If you have a funded HSA from the old plan, that balance is available tax-free either way.
The election notice reads like a demand. It is closer to an option you hold.
| Step | Deadline | What it means for you |
|---|---|---|
| Employer notifies the plan | 30 days from the qualifying event | If your employer is also the plan administrator, the notice can legally take up to 44 days to reach you. It is not lost. |
| Plan sends your election notice | 14 days after that | |
| You elect | At least 60 days, from the later of the notice date or the date coverage ended | This is your decision window, and it is yours to use. |
| You make the first payment | At least 45 days after electing | Electing and paying are separate acts. In practice the two windows stack. |
| Later payments | 30-day grace period each | Missing one ends the coverage. |
Elect on day 55 and coverage is backdated to the day you lost it. You pay the back premiums, but nothing that happened in between falls into a gap. In effect you can shop for the full 60 days holding COBRA in reserve, and only pay for it if you need it.
One condition. That works if you have simply not replied. If you sign and return a waiver and then change your mind, the plan is not required to backdate at all — coverage can start from the day you revoked the waiver, leaving anything treated in between uninsured. So do not sign a waiver to tidy up your paperwork. Just do not reply until you have decided.
And your marketplace special enrollment period runs alongside it. Losing job-based coverage gives you 60 days, and it opens up to 60 days before the loss — so if you have a termination date on the calendar, you can line up a replacement policy before your last day rather than after it.
This is the single most expensive mistake in this whole subject, and most of the pages ranking above us either bury it or leave it out. Federal rule 45 CFR 155.420(e)(1) excludes stopping COBRA payments from what counts as a loss of coverage. HealthCare.gov puts it plainly: “Voluntarily dropping COBRA doesn’t count.”
What does work, three ways:
• You are still inside the original 60 days from losing your job-based coverage. Switch now and there is no problem at all.
• It is annual open enrollment. You may drop COBRA for a marketplace plan for any reason, no justification needed.
• Your COBRA has run out at the end of its full 18 or 36 months. Exhaustion is a qualifying event and opens a fresh 60-day window. Running out is not the same as quitting.
There is one narrow extra: if your former employer stops contributing to your COBRA premium, or a government COBRA subsidy ends, that does count as a qualifying event.
The practical rule is simply this: never cancel anything until the replacement policy is confirmed active. Get the new effective date in writing, then stop the old coverage. That order costs nothing and it is the whole ballgame.
Not reasons to keep COBRA — reasons to do the arithmetic properly first, so you are not switching into something worse.
All four take one conversation to settle. That is the conversation we have for free.
Because you were only ever seeing part of it. Your employer was paying most of the premium and your payroll deduction was the remainder. COBRA lets the plan charge up to 102 percent of the full cost - the whole premium plus a 2 percent administrative fee - so the number on your election notice is the real price of the coverage you already had. Using the 2025 KFF employer survey averages, a worker paying about $120 a month for single coverage sees roughly $793, and a family paying about $571 sees roughly $2,294.
In rough order of how often they win: a marketplace plan with a premium tax credit, joining a spouse's or partner's employer plan, Medicaid if your income has dropped far enough, staying on a parent's plan if you are under 26, an ICHRA if you are going self-employed and have a business that can fund one, and a short-term plan as a last resort. Losing job-based coverage opens a 60-day special enrollment period for the first four of those.
At least 60 days, running from the later of the date your election notice was provided or the date you would otherwise lose coverage. Your employer has 30 days to notify the plan and the plan has 14 days to send the notice, so if the employer is also the plan administrator the combined deadline is 44 days from the qualifying event. After you elect, you get at least 45 more days to make the first payment.
Only in specific windows, and this is where people get hurt. You can switch while you are still inside the original 60 days from losing your job-based coverage. You can switch during annual open enrollment for any reason. And you can switch when COBRA runs out at the end of its full term, which opens a fresh 60-day special enrollment period. What does not work is simply cancelling COBRA in, say, April - voluntarily dropping it is not a qualifying event, and you would be uninsured until January.
If you have simply not responded yet and then elect on day 55, coverage is backdated to the date you lost it and you pay premiums back to that date. That is what people mean by the 60-day loophole. But if you signed and returned a waiver and then changed your mind, the plan is not required to backdate - coverage may start only from the date you revoked the waiver, leaving a real gap for anything you were treated for in between. Do not sign a waiver to buy time.
Yes. Health insurance premiums are normally not a qualified HSA expense, but continuation coverage is one of the narrow exceptions written into the tax code, and so is coverage while you are receiving unemployment compensation. If you have a funded HSA sitting from your old plan, that is tax-free money you can put against COBRA or against premiums while you are out of work.
No. Carriers build the commission into the premium whether you use a broker or enroll yourself, so the rate is identical either way. What you get for free is somebody who checks your subsidy against your projected income rather than last year's, checks your doctors are actually in the network, and makes sure the replacement policy is active before anything gets cancelled.
Your monthly COBRA quote, your ZIP code, ages, and roughly what you expect to earn this year. We come back with what the same household actually pays on the marketplace after any subsidy, whether your doctors are in it, and how many days you have left. If COBRA is genuinely the better deal for you, we will say so — you are not our only call today. Free either way, because carriers pay our commission.