Keeping Your Old Health Plan After a Layoff: COBRA Decisions

Adapted from Retirement and Health Care Coverage...Questions and Answers for Dislocated Workers, published by the U.S. Department of Labor; selected section: Continuing in Your Old Plan. The source text is reproduced with headings and formatting adjusted for this guide.

Continuing in Your Old Plan

Another way to maintain health coverage between jobs is to elect COBRA coverage.

While you may lose health coverage from your former employer, you may have the right to continue coverage under certain conditions. Health continuation rules enacted under COBRA apply to dislocated workers and their families as well as to workers who change jobs or whose work hours have been reduced, thus causing them to lose eligibility for health coverage. This coverage is temporary, however, and the employee may have to pay the full cost, which may be more than the employee was paying while employed.

Am I eligible for COBRA coverage?

To be eligible for COBRA coverage:

• You must have been enrolled in your employer's health plan when you worked,
• The health plan must continue to be in effect for active employees, and
• You must elect COBRA coverage.

Which employers are required to offer COBRA coverage?

Employers with 20 or more employees are usually required to offer COBRA coverage. COBRA applies to private-sector employees and to most state and local government workers.

In addition, many states have laws similar to COBRA, including those that apply to insurers of employers with fewer than 20 employees (sometimes called mini-COBRA). Check with your state insurance commissioner's office to see if such coverage is available to you.

What if the company closed or went bankrupt and there is no health plan?

If there is no longer a health plan, no COBRA coverage is available. However, if the company offers another plan, you may be eligible for coverage under that plan.

Union members who are covered by a collective bargaining agreement that provides for a medical plan also may be entitled to continued coverage.

How do I find out about COBRA coverage, and how do I elect to take it?

Employers or health plan administrators must provide an initial general notice if you are entitled to COBRA coverage. You probably received this initial notice when you were hired.

When you are no longer eligible for health coverage, your employer must provide you with an election notice regarding your rights to COBRA continuation benefits.

Here is the sequence of events:

Within 30 days after your termination or a reduction in hours that causes you to lose health benefits, employers must notify their plan administrators.

Within 14 days after the administrator has received notice from the employer, the plan administrator must notify you and your covered dependents, in writing, of your right to elect COBRA coverage.

By the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later, you must respond to this notice and elect COBRA coverage. If you do not respond, you will lose all rights to COBRA coverage.

Spouses and dependent children covered under your health plan have an independent right to elect COBRA coverage upon your termination or reduction in hours. If, for instance, you have a family member with an illness when you are laid off, that person alone can elect coverage.

Certain Trade Adjustment Assistance (TAA) Program participants have a second opportunity to elect COBRA coverage:

• Individuals who are eligible and receive Trade Readjustment Allowances,
• Individuals who would be eligible to receive Trade Readjustment Allowances, but have not yet exhausted their unemployment insurance benefits, and
• Individuals receiving benefits under Alternative Trade Adjustment Assistance or Reemployment Trade Adjustment Assistance, and who did not elect COBRA during the general election period.

This second election period is measured 60 days from the first day of the month in which an individual is determined eligible for and receives the TAA benefits. For example, if an eligible individual's general election period runs out at the beginning of the month, they would have approximately 60 more days to elect COBRA. However, if this same individual meets the eligibility criteria at the end of the month, the 60 days are still measured from the first of the month, in effect giving the individual about 30 days.

You must elect COBRA no later than 6 months after TAA-related loss of coverage. COBRA coverage chosen during the second election period typically begins on the first day of that period. More information about the Trade Act is available on the Department of Labor's Employment and Training Administration website.

If I elect COBRA, how much do I pay?

When you were an active employee, your employer may have paid all or part of your group health premiums. Under COBRA, as a former employee, you will usually pay the entire premium – that is, the amount you paid as an active employee plus the amount of the contribution made by your employer. In addition, there may be a 2 percent administrative fee.

It is likely that there will be a lapse of a month or more between the date of layoff and the time you make the COBRA election decision, so you may have to pay health premiums retroactively – from the time of separation from the company. The first premium, for instance, will cover the entire time since your last day of employment with your former employer.

You should also be aware that you have to pay for COBRA coverage even if you do not receive a monthly statement. If timely payment is not made, the employer may cease providing coverage.

Although they don't have to do so, some employers may pay for part or all of the cost of health coverage, including COBRA coverage, for terminating employees and their families as part of a severance agreement. If you do receive this type of severance benefit, talk to your plan administrator about how this would impact your COBRA coverage or your special enrollment rights.

If I elect COBRA, can I later enroll in a Health Insurance Marketplace® plan?

If you elect COBRA coverage, you will have another opportunity to request special enrollment in a Marketplace plan or new group health plan if you have a new special enrollment event, such as marriage, the birth of a child, or exhausting your COBRA coverage. You may also choose to drop your COBRA continuation coverage and enroll in a Marketplace plan during the annual Marketplace open enrollment period, even if you have not yet exhausted your COBRA coverage.

You must complete the maximum period of COBRA coverage available (usually 18 months for job loss) to exhaust your COBRA coverage. If you choose to terminate your COBRA coverage early or fail to pay your COBRA premiums, you generally will have to wait to enroll in other coverage until the next open enrollment period for the Marketplace or the new group health plan.

If you decide to change plans, you may want to keep your COBRA coverage until your Marketplace plan is effective to avoid a gap in coverage.

When does COBRA coverage begin?

Once you elect coverage and pay for it, COBRA coverage begins on the date your health care coverage stopped, even if that date has already passed.

How long does COBRA coverage last?

Generally, individuals who qualify are initially covered for a maximum of 18 months, but coverage may end earlier under certain circumstances, including:

• You don't pay your premiums on time,
• Your former employer decides to discontinue a health plan altogether,
• You obtain coverage with another employer's group health plan, or
• You qualify for Medicare benefits.

Employers may offer longer periods of COBRA coverage, but they are only required to do so under special circumstances, such as disability (yours or a family member's), an employee's death or divorce, or when an employee's child ceases to meet the definition of a dependent child under the health plan.

Who can answer other COBRA questions?

Three federal agencies are responsible for COBRA administration. The Department of Labor handles questions for private-sector employees. The Department of Health and Human Services handles questions for state and local government workers. The Internal Revenue Service, as part of the Department of the Treasury, has other COBRA responsibilities.

You can get more details about COBRA on the Employee Benefits Security Administration's website.

To receive a copy of An Employee's Guide to Health Benefits Under COBRA or to speak to a benefits advisor, you can contact the Employee Benefits Security Administration online or call 1-866-444-3272.

For telephone numbers of the Department of Health and Human Services office closest to you, call 1-844-USA-GOV1 (872-4681) or visit USA.gov.

Possible benefits for trade affected workers

The Trade Adjustment Assistance Program helps workers who have lost or may lose their jobs due to negative effects of global trade. This program seeks to provide adversely affected workers with opportunities to obtain the skills, credentials, resources, and support necessary to become reemployed.

Through grants to states, workers who are part of a worker group that is covered by a certified Trade Adjustment Assistance petition may be eligible for benefits and services such as employment and case management services, training, job search and relocation allowances, wage supplements for older workers, and income support (called Trade Readjustment Allowances) while in training. States receive Trade Adjustment Assistance funds throughout the year. For more information about this program, visit the Employment and Training Administration's website or call 1-888-DOL-OTAA (365-6822).

The Health Coverage Tax credit expired on December 31, 2021. If you have questions about the Health Coverage Tax Credit, visit the IRS's website.

This guide concerns U.S. workplace benefits and the federal rules described by the Department of Labor. The type of plan, its governing documents, and the facts of a claim matter. Government, church, and other excluded plans may follow different rules.

Source and scope

Retirement and Health Care Coverage...Questions and Answers for Dislocated Workers — U.S. Department of Labor. Accessed October 28, 2026. This public domain federal guidance is an educational reference; use the source publication and the applicable plan or employment documents for the full context and later updates. Fynoptic is independent and is not endorsed by the Department of Labor.