--- title: COBRA and Continuation Coverage url: https://www.tnhealthcoverageexplained.org/cobra-and-continuation description: Learn how COBRA continuation coverage works in Tennessee: who qualifies, the 18-month limit, full premium plus 2% fee, and when the marketplace is cheaper. last_verified: 2026-10-18 publisher: TN Health Coverage Explained (independent; does not sell insurance) --- # COBRA and Continuation Coverage When you leave a job, you don't necessarily lose health insurance the same day. COBRA lets you keep your employer's exact plan for a while — but you pay the whole bill yourself. Here's the honest version: COBRA is expensive by design, and the marketplace is usually cheaper for most people. COBRA makes sense in specific situations. Know which one you're in before you sign up. ## What COBRA actually is Federal law (COBRA — the Consolidated Omnibus Budget Reconciliation Act) lets you temporarily keep the group health plan you had through your employer after a "qualifying event": - You lose or leave your job (voluntary or involuntary, as long as it wasn't gross misconduct) - Your hours are cut so you're no longer eligible for the group plan - Your spouse or dependent children lose coverage because of your job loss, your death, divorce, or a child aging off the plan You generally qualify if your employer had **20 or more employees**. Smaller employers sometimes offer state continuation coverage instead, but Tennessee doesn't have a state "mini-COBRA" — so if your employer was under 20 people, ask them directly whether any continuation option exists, because there may not be one. ## How long it lasts and what it costs **Duration:** typically **18 months** after your qualifying event. Certain situations (like disability determinations or second qualifying events) can extend that, but 18 months is the standard expectation. **Cost:** you pay the **full premium** — your old share plus the employer's old share — **plus up to a 2% administrative fee**. That means the premium you see on your COBRA election notice is often three to four times what was coming out of your paycheck. The sticker shock is the number-one reason people decline COBRA, and the shock is usually justified. ## When COBRA beats the marketplace - **You're mid-treatment with specific doctors.** COBRA keeps your exact plan, your exact network, your exact deductibles as they stood. No new network to learn, no interrupted care. - **It's a short gap.** New job starts in two months with good coverage? COBRA bridges that gap with zero disruption. - **You've already spent toward the deductible.** If you've racked up thousands in medical costs this year, switching to a new plan that resets your deductible could cost more than COBRA's premium. ## When the marketplace is the better deal For most people, it is. If your income qualifies you for premium tax credits on HealthCare.gov, **a subsidized marketplace premium almost always beats full-price COBRA** — sometimes by hundreds of dollars a month. Note: with the enhanced credits expired (see [Subsidies in Tennessee for 2027](https://www.tnhealthcoverageexplained.org/costs/subsidies)), credits now run only up to 400% of the federal poverty level, so do the math for your own situation. Also know: **voluntarily dropping COBRA doesn't trigger a special enrollment period.** If you take COBRA and then quit paying for it mid-year, you generally can't jump to the marketplace until open enrollment. (Losing COBRA involuntarily — including when it *runs out* — does trigger a SEP.) ## Leaving a job: you can choose the marketplace even if COBRA is offered Being offered COBRA doesn't take away your right to a marketplace special enrollment period. Losing job-based coverage opens one either way. - **Your window starts 60 days before your coverage ends.** If you pick a marketplace plan by the last day of your old coverage, the new plan starts the first day of the next month, with no gap. - **You also get 60 days after it ends.** If you enroll after your job coverage ends, the marketplace plan starts the first of the month after you pick it, which can leave a gap. - **COBRA can fill that gap.** You usually have 60 days to elect COBRA, and coverage is retroactive to the day your job coverage ended. People sometimes elect COBRA only for a gap month, but you must pay the premium for any month you keep. - **Electing COBRA doesn't use up your special enrollment period.** You keep the full 60-day window that started when your job coverage ended. But **after that window closes, voluntarily dropping COBRA does not open a new one.** You'd wait for open enrollment, or until COBRA runs out. - **Tax credits only come with marketplace plans.** You can't use a premium tax credit to pay for COBRA. If you qualify for a credit, compare COBRA's full price against the after-credit marketplace price. - **Switching resets your deductible.** A new marketplace plan starts your deductible and out-of-pocket spending over at $0. If you've already spent a lot this year, staying on COBRA until December 31 and switching to a marketplace plan for January 1 during open enrollment (November 1 – December 15 for a January 1 start) can cost less. Going self-employed? Your marketplace tax credit is based on your expected net self-employment income for the year. [Self-employed guide](https://www.tnhealthcoverageexplained.org/guides/self-employed). ## Don't let coverage lapse without a plan This is the real risk with COBRA: the 18 months tick by quietly, and then your coverage ends. Losing or exhausting COBRA **is** a qualifying event for a **60-day special enrollment period** on the marketplace — but only if you enroll within the window. Mark the end date the day you elect COBRA. --- ## Frequently asked questions **I'm leaving my job and was offered COBRA. Can I get a marketplace plan instead?** Yes. Losing job-based coverage opens a 60-day special enrollment period whether or not COBRA is offered. You can apply up to 60 days before your coverage ends; pick a plan by your last day of coverage and the new plan starts the first of the next month. **If I elect COBRA, can I switch to the marketplace later?** Within 60 days of losing your job coverage, yes. After that, voluntarily dropping COBRA doesn't open a special enrollment period. You can switch during open enrollment, or when COBRA runs out. **Can I use a premium tax credit for COBRA?** No. Marketplace tax credits only apply to plans bought through HealthCare.gov. **How long does COBRA last?** Generally 18 months after the qualifying event. Certain situations — a disability determination, or a second qualifying event like divorce during the COBRA period — can extend coverage, but 18 months is the standard case. **Do I pay the full premium for COBRA?** Yes. You pay the entire premium (your share plus the employer's former share) plus up to a 2% administrative fee. That's why COBRA premiums are often three to four times what you were paying out of your paycheck. **Is COBRA cheaper than a marketplace plan?** Usually no. If you qualify for premium tax credits, a subsidized marketplace plan is almost always cheaper than full-price COBRA. COBRA's edge is continuity — same doctors, same plan, same deductible progress — which matters most mid-treatment or during short coverage gaps. **What happens when my COBRA runs out?** Losing COBRA coverage — including when it expires at 18 months — is a qualifying life event that opens a 60-day special enrollment period to enroll in a marketplace plan. Don't miss the window. **I'm turning 26 and aging off my parent's plan. Should I take COBRA or get my own plan?** Aging off a parent's plan triggers a special enrollment period for your own marketplace plan. COBRA may be offered, but for most 26-year-olds a marketplace plan with tax credits (if income-eligible) is far cheaper. See [Turning 26](https://www.tnhealthcoverageexplained.org/guides/turning-26). --- ## Sources - U.S. Department of Labor — Employee Benefits Security Administration: COBRA Continuation Coverage guidance - Healthcare.gov — COBRA coverage and losing job-based coverage - 45 CFR 155.420 and CMS's 2016 rule change — loss of job-based coverage opens a special enrollment period even when COBRA is offered; electing COBRA doesn't end the 60-day window; voluntarily ending COBRA later is not a qualifying event - DOL — 60-day COBRA election period with coverage retroactive to the loss of coverage --- **Your next step:** If COBRA feels right, elect it — then put your coverage end date on a calendar. If price is the deciding factor, compare subsidized marketplace plans at [The Marketplace](https://www.tnhealthcoverageexplained.org/marketplace) or check what financial help you qualify for at [Subsidies in Tennessee for 2027](https://www.tnhealthcoverageexplained.org/costs/subsidies).