How does COBRA work when you get a new job?

If you lose your employer’s health insurance, COBRA insurance softens the blow by temporarily allowing you to keep the group health plan. COBRA continues your employer’s health insurance after your last day at work. So, you get to benefit from the same health insurance coverage. However, it comes with a hefty price tag.

You pay all of the COBRA health insurance costs—without your former employer’s help.

Read on to learn more about COBRA, how to sign up and how it works.

How does COBRA work for new jobs?

When starting a new job, COBRA can serve as a temporary bridge for your health insurance coverage. If your new employer’s health plan has a waiting period before coverage begins, COBRA allows you to maintain your previous employer’s insurance during that time. However, you will be responsible for paying the full premium, including the portion your former employer may have subsidized, along with a small administrative fee. Once your new employer’s coverage starts, you can discontinue COBRA to avoid overlapping costs.

How does COBRA insurance work if I quit my job?

If you voluntarily leave your job, you can still qualify for COBRA insurance. Your premiums will be paid for up to 18 months after you leave. Dental and vision insurance is also covered as long as you had coverage when you were employed. Some states extend medical coverage only (not dental or vision) to 36 months for you and your dependents.

How does COBRA work if I get a new job?

Once you get hired at a new job, you can continue your COBRA coverage or enroll in the new employer’s group health plan.

In most cases, it won’t make sense to continue COBRA insurance if you can enroll in a new group plan because COBRA will usually be much more expensive. Additionally, you are no longer eligible for COBRA if you have access to another group health plan unless the new plan doesn’t offer a comparable level of coverage as your COBRA plan. Remember that COBRA eventually expires, meaning you could have a lapse in coverage if you don’t sign up for a new plan in time.

If your employer doesn’t offer a group health plan, you can buy an individual policy from the health insurance marketplace.

Does COBRA end when I get a new job?

COBRA coverage doesn’t automatically end when you get a new job, but you can choose to terminate it once your new employer’s health insurance takes effect. If there’s a waiting period before your new coverage starts, COBRA can act as a temporary safety net, ensuring you don’t experience a gap in health insurance. However, it’s important to evaluate the cost of COBRA compared to your new employer’s plan, as COBRA often requires paying the full premium plus administrative fees. Once your new coverage is active, you can cancel COBRA without penalty.

Can I continue COBRA with a new job?

You can keep COBRA coverage when you get a new job, even if your new employer offers you a new health plan. However, COBRA will likely be much more expensive.

You may want to keep COBRA coverage if your new employer’s health plan doesn’t include your preferred healthcare providers. For instance, if you visit multiple doctors who accept the COBRA plan but not your new employer’s plan, it might be worth paying the higher COBRA costs to maintain access to your current provider network.

However, keep in mind that if you decline your new employer’s health plan, you’ll typically need to wait until the next open enrollment period to enroll in their group health coverage.

How to get COBRA insurance between jobs

You don’t have to wait for any enrollment period to get COBRA coverage. Once you experience a qualifying event and lose employer-sponsored health insurance, you can sign up for COBRA coverage. Your employer will notify you that you qualify for coverage within 30 days of your termination date, and provide instructions for enrolling. You then have 60 days to opt into coverage.

Can you have COBRA and another insurance at the same time?

No, you cannot have COBRA continuation coverage and another health insurance plan simultaneously. If you previously worked for a company with more than 20 employees and had health insurance through them, COBRA allows you to maintain that coverage for up to 18 months after leaving your job. This option is available as long as you don’t enroll in another health insurance plan, such as one offered by a new employer.

The COBRA law is designed to help workers maintain their health benefits after job loss, providing a temporary solution until you secure new employment with comparable health coverage.

COBRA insurance cost

COBRA allows you to keep your employer’s health insurance, but that’s not cheap. You have to pay the entire tab for the premiums, plus up to 2% in administrative costs. Your previous employer will no longer help you with your health insurance costs — it’s all on you.

The average employer-sponsored health insurance family plan costs over $22,000 in annual premiums. An employer usually picks up more than half of health insurance costs. However, employers don’t pay for COBRA, so those costs are passed onto the former employee. That means a significant COBRA premium.

A cost-saving strategy is to wait and evaluate your need for COBRA coverage within the 60-day enrollment window. This approach allows you to avoid paying premiums upfront while assessing whether COBRA is necessary or if you can secure a more affordable health insurance option.

If you find that you need coverage, you will get retroactive coverage back to the qualifying date, but you’ll have to pay the premiums for the entire period that you’re eligible, even if you sign up 60 days later. For example, if you sign up on day 59, you still have to pay all the premiums from the 59 days.

You might be eligible for a federal income tax credit to help you with COBRA premiums. The U.S. Department of Labor said the Health Coverage Tax Credit (HCTC) is potentially open to people who lost their jobs because of the “negative effects of global trade.”

You may also be eligible if you receive benefits under the Trade Adjustment Assistance Program or receive pension payments from the Pension Benefit Guaranty Corporation.

The HCTC pays 72.5% of premiums. You fork over the remaining 27.5%. If you’re eligible, you might wind up paying similar premiums as you did when you were employed.

Learn more about COBRA costs.

How to qualify for COBRA health insurance

To opt into COBRA continuation coverage, your group health plan must be covered by COBRA. Generally, that includes group health plans sponsored by a private sector or state/local government employer that employs at least 20 employees. Part-time employees are counted as a fraction of full-time employees and do not fully contribute to the 20-employee quota.

A qualifying event must also occur, which is an event that caused you to lose your group health insurance coverage. For example, you qualify for COBRA if you’re fired by your employer, as long as it’s not due to gross misconduct. You can also qualify if your hours were cut below the minimum to qualify for group coverage. Beneficiaries can also get COBRA if they qualified for the group health plan the day before the qualifying event, who then lost coverage due to the qualifying event. 

Finally, to be eligible for COBRA, you must have been enrolled in your employer’s group plan while you worked.

COBRA rules

You can only get COBRA continuation coverage if you work for a private-sector company with 20 or more employees or a state or local government. However, you may find your state has a similar COBRA law for smaller companies.

COBRA is available for people who quit their jobs or were:

• Laid off
• Fired and it wasn’t for “gross misconduct”
• Lost health insurance because an employer cuts your hours
• Lost coverage because of a divorce, a spouse’s death or another qualifying event

COBRA coverage periods

You are not locked into COBRA coverage and can cancel at any time within 18 months. You will likely want to drop COBRA once you become eligible for a different health plan, such as if you get another job.

If you stop paying premiums, COBRA coverage will end automatically. A health plan may also terminate a COBRA plan if your former employer drops group health insurance coverage.

Final thoughts

When you get a new job, COBRA allows you to keep your old employer’s health insurance for up to 18 months. You’ll need to pay the full premium, including your previous employer’s share, plus a 2% administrative fee. 

Once you begin your new job and become eligible for health insurance through your employer, you can decide whether to continue with COBRA coverage or switch to the new plan. In most cases, the new employer-sponsored plan will be significantly more affordable. COBRA serves as a temporary solution to ensure uninterrupted healthcare coverage during the transition between jobs.

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