COBRA vs a Private Health Plan: How to Compare Before Your Deadline

When a job-based plan ends, most people get a COBRA or state continuation notice in the mail and have only a few weeks to decide. Before you sign it, it is worth putting the numbers side by side with a private plan of your own.

This is general information, not legal or tax advice. Rules depend on your employer, your plan and your state, so confirm the details in your notice.

What COBRA is

COBRA is a federal law. It generally applies to employers with 20 or more employees and lets you keep the same group plan for a limited time after a job loss, a cut in hours or certain other events. For the employee it usually lasts up to 18 months. The catch is the price: you generally pay the entire premium, including the part your employer used to pay, plus up to a 2% administrative fee, for up to 102% of the plan's cost.

You generally have at least 60 days to elect COBRA, measured from the later of the date coverage ends or the date you receive the election notice.

What state continuation is

If your employer had fewer than 20 employees, federal COBRA usually does not apply. Many states have their own continuation law instead, and the rules vary widely:

• Georgia: the rest of the month plus 3 policy months.
• South Carolina: the rest of the month plus 6 policy months.
• Texas: up to 9 months on fully insured plans.
• Illinois, Ohio and Virginia: up to 12 months, each with its own conditions.
• Florida, Maryland, North Carolina, Colorado and Wisconsin: up to 18 months.
• Michigan: no general state continuation law.

See our state guides for the rules and deadlines in each state we cover.

What a private plan is

A private individual or family plan is a policy you own. It is not tied to an employer, so it does not end when a job or a continuation period does, as long as premiums are paid. Private plans are priced on factors like age, household, location, tobacco use and plan design, and approval depends on the carrier's underwriting. Many private plans accept applications year round.

How to compare them

What to compare	COBRA or state continuation	Private plan
Monthly cost	Full group premium, often plus a fee	Depends on age, household, plan design and underwriting
Network and benefits	Exactly the same as before	Depends on the plan you choose
How long it lasts	Limited by law, from about 3 to 18 months or more	As long as you keep paying and the plan is renewed
Deductible progress	Usually carries over within the same plan year	A new plan starts its own deductible
Approval	No new application questions	Subject to underwriting

A simple way to compare is to look at the worst-case year for each option: twelve months of premium plus the out-of-pocket maximum. Then think about timing. If you have already met most of your deductible this year, staying on the same plan for a few months can make sense. If you will need coverage for longer than continuation lasts, a private plan may be the better long-term choice.

Deadlines to watch

• Your election deadline. Federal COBRA usually gives at least 60 days. State deadlines can be much shorter, sometimes 30 or 31 days, or even 10 days after notice in Ohio.
• Your last day of coverage. Ask HR for the exact date your group plan ends. Many plans end at the end of the month.
• Your new plan's start date. If you choose a private plan, line up its start date with the day your old plan ends. Do not cancel anything until the new plan is approved.

The bottom line

COBRA and state continuation buy you time with the plan you know, at the full price. A private plan gives you coverage that is yours, priced on your own household. Compare both before your deadline. If you want help, you can get an instant estimate or talk to a licensed agent.