COBRA’s Mid-Life Crisis Hits at 39

Facing 275,000+ March layoffs and a vastly changed healthcare cost landscape, the 1986 legislation confronts challenges its creators couldn’t have foreseen.

Thirty-nine years ago today, COBRA was signed into law, originating as a critical bridge for Americans navigating the uncertainty of job loss. Conceived in an era with vastly different economic pressures and healthcare costs – consider that the average annual premium for employer-sponsored family health coverage was roughly $2,530 back then, compared to nearly $26,000 today^* – its framework wasn’t designed for the scale and complexity we face now. As COBRA hits this significant milestone today, it does so under the shadow of a modern storm: over 275,000 layoffs announced last month alone. These numbers starkly illuminate how decades of escalating healthcare expenses and a more fluid, often volatile, job market have fundamentally altered the environment COBRA operates within. The result is a system under profound strain – where employers face amplified complexity, cost, and risk, and departing employees face a daunting search for affordable, adequate coverage.

The Bottom-Line Pressure Points for Employers

For all companies – and especially those navigating workforce adjustments – the first signs of system breakdown manifest in financial volatility and risk – the severity of which are often underestimated. COBRA participants can represent a higher-cost group. Each departing employee who utilizes COBRA costs 2-3X more than an employee claim under a standard plan. That cost impact is compounded for departing employees with greater healthcare needs, and snowballs into inflated claims and premiums across organizations. 

This is especially significant for self-insured organizations. In fact, according to the 2024 Mercer National Survey of Employer-Sponsored Health Plans, managing high-cost claimants is the top healthcare cost-management concern for large employers, with 54% considering it a very important strategy for the next 3-5 years.^*** This financial pressure exists alongside the administrative complexities of COBRA compliance – managing notifications, eligibility, and payments remains a resource-intensive challenge fraught with legal risk, even when aspects are outsourced. This presents a challenge to any business, but especially small businesses already struggling to stay afloat in a challenging economic context.

Affordability vs. Access: The Employee Dilemma

Going beyond cost and compliance, offboarding experience itself is a crucial touchpoint for businesses. Workforce adjustments  inherently create feelings of shock, resentment, and sadness in current and departing employees. Departing employees – often reeling from job loss – are immediately met with potentially unaffordable COBRA premiums. These premiums represent the full cost plus an administrative fee, and come with little guidance. To departing employees that reality can feel less like a safety net and more like an insurmountable hurdle. Imagine the anxiety of losing income while simultaneously facing healthcare premiums in the thousands per month. Employees are forced to make complex decisions impacting family well-being during an already overwhelming time. This compounded stress and lack of support through it can inadvertently damage hard-earned employer brand reputation and goodwill.

1986 Framework, 2025 Challenges

The fundamental challenge is clear: the gap between the conditions COBRA was designed for and the realities of today continues to widen. The sheer volume of transitions, combined with the hyper-inflation of healthcare costs over nearly four decades, necessitates a more comprehensive, supportive, and efficient approach than relying solely on the COBRA framework. It’s not that the bridge built 39 years ago is without value, but rather that the traffic, weather, and structural demands on it have increased exponentially.

When – Times Change

This confluence – COBRA’s 39th milestone falling amidst near-record layoff announcements and decades of rising costs – serves as a critical inflection point. It’s a moment for organizations to honestly evaluate if simply meeting the baseline requirement of offering COBRA is truly sufficient in today’s complex environment. Relying solely on this 1986 framework carries increasing risks – financial, administrative, and reputational – while potentially leaving departing employees to navigate difficult choices alone during a stressful time.

Forward-thinking companies recognize this gap. They know that truly supporting their people through transitions means going beyond basic compliance. It means providing guidance, clarity, and access to the best possible options.

That’s where When comes in. We built When specifically to address this modern challenge. As the only platform that partners directly with companies at the employer benefit level in this unique way, we provide a proactive and supportive alternative for healthcare transitions. While companies must, by law, offer COBRA, our platform empowers their departing employees by giving them access to an AI-powered health insurance marketplace. Here, individuals can easily explore and enroll in ACA exchange plans or private insurance options – plans that may be significantly more suitable or affordable. When helps employees understand their options to avoid taking the quick – but vastly more expensive – path with COBRA. Our AI helps compare plans based on cost, coverage, and network needs, uncovering potential subsidies and savings. This tech-driven approach gives employees choices in a stressful time – choices for coverage, and for private self-service, as well as human support. 

Our dedicated concierge support team doesn’t just explain plans; they guide transitions with empathy. They simplify complex healthcare decisions ensuring individuals receive the human guidance they need. This approach not only gives employees the support they deserve, it turns departures from potentially negative experiences into ones that foster goodwill. This leads to positive alumni relationships, and significantly reduced support burdens for internal HR teams. Our goal is simple: to ensure no one has to navigate the complexities of post-employment healthcare alone.

By facilitating seamless access to a wider range of potentially better-fitting plans through both smart technology and human care, we help individuals make informed decisions during a critical life moment. For our company partners, this transforms offboarding into a more positive, supportive experience. It demonstrates genuine care, enhances employer brand reputation, and helps mitigate the risks and potential costs associated with high COBRA enrollment by guiding people effectively toward all viable solutions. We believe this is the modern, compassionate, and responsible approach to managing workforce transitions today – perhaps proving that turning 39 doesn’t have to be such a crisis after all, especially with the right support system.

Sources:

^*Comparison based on data from the U.S. Government Accountability Office (GAO Report HEHS-97-122, citing $2,530 average family premium in 1988) and the Kaiser Family Foundation (KFF 2024 Employer Health Benefits Survey, citing $25,572 average family premium in 2024).

^***Mercer, National Survey of Employer-Sponsored Health Plans 2024. (Note: Proprietary report).