We hear this from benefits leaders all the time. It sounds logical. You've invested in a generous health plan. Your employees like it. So when they leave, of course they'll elect COBRA to keep it. Right?
The data says otherwise. Exposed to the full, unsubsidized cost of COBRA, 80-90% of eligible employees choose something else.
The assumption that a rich plan drives COBRA election confuses plan quality with plan affordability. Departing employees don't make coverage decisions based on how good their plan was. They make them based on cost, confusion, and what options they can actually see. And when you look at what they're actually choosing, the picture is clear.
The election rate has never been high
Before the ACA existed, when COBRA was the only real option for people losing employer coverage, election rates ranged from roughly 15% to one-third of qualified beneficiaries, according to Alegeus, one of the largest COBRA technology platforms in the country. That was the ceiling, in an era when the alternative to COBRA was the pre-ACA individual market, where insurers could deny coverage for pre-existing conditions.
Today, with subsidized ACA marketplace plans available to anyone who loses employer coverage, COBRA administrators consistently report election rates in the range of 12-15%. And among eligible individuals who did not elect COBRA, 80% said cost was the most important factor in their decision, per KFF's analysis, even when subsidies were available.
That's not a story about plan richness. That's a story about price.
An employee who paid roughly $120/month for single coverage while employed is suddenly staring at $793/month for COBRA. That's a 6.6x increase at the exact moment their income disappears. Most people simply can't absorb that, no matter how much they liked their plan.
Even massive subsidies don't move the needle much
We've already run this experiment. In 2009, the federal government offered a 65% COBRA premium subsidy through the American Recovery and Reinvestment Act. Take-up roughly doubled, from 19% to 38%.
That's the ceiling. With the government covering nearly two-thirds of the premium, more than 60% of eligible employees still said no. And among those who did enroll, more than half told researchers they wouldn't have elected COBRA without the subsidy.
If a 65% discount can't push COBRA above 40%, the richness of your plan isn't the deciding factor. Affordability is.
COBRA subsidies don't last forever. Job searches do.
Some employers offer COBRA subsidies as part of severance. That makes sense as a short-term gesture. But it creates a ticking clock problem.
The median job search currently takes about 2.6 months. The mean is closer to six months, and rising. The share of long-term unemployed (27+ weeks) hit 25.4% in March 2026, the highest level since the post-COVID recovery. Workers over 55 and senior-level professionals face even longer searches.
When a COBRA subsidy runs out after three or six months and the employee is still looking, they're back to paying full freight. And they still need to find new coverage. Except now they're deeper into unemployment, more financially strained, and navigating the transition alone.
That's not a plan. That's a gap.
When COBRA actually makes sense (it's a short list)
There are real, specific scenarios where COBRA is the right call for a departing employee:
They're mid-treatment with a specialist who isn't in any marketplace plan's network
They've already hit their deductible for the year and switching plans would reset it
They expect to start a new job with benefits within 30-60 days
They're receiving a COBRA subsidy and have a short expected gap
These are legitimate reasons. But they describe a narrow subset of departing employees, not the default. And even in these cases, the decision depends on comparing COBRA against specific marketplace alternatives, side by side, with actual cost and network data.
That comparison is exactly what most departing employees never get. They get a COBRA election notice in the mail and assume it's their only real option.
The real risk isn't that people choose COBRA. It's who chooses COBRA.
Here's the part that matters most for self-funded employers. When 80-90% of eligible employees decline COBRA, the 10-20% who elect it are disproportionately the ones with active, expensive care needs. That's not a coincidence. It's adverse selection by design.
COBRA participants are 15x more likely to generate a catastrophic claim of $1,000,000+. They're more likely to have upcoming surgeries, ongoing treatments, or chronic conditions that make continuity of coverage worth paying a premium for. Your "rich plan" isn't attracting loyalists. It's concentrating risk.
The employees who don't have immediate care needs? They're moving to marketplace plans, going onto a spouse's coverage, or in some cases going uninsured entirely. A 2024 KFF survey found that 64% of uninsured working-age adults cited cost as the primary reason for going without coverage. Many of these are people who were recently on employer plans and chose no coverage over COBRA's price tag.
What actually helps
Remember: departing employees don't make coverage decisions based on how good their old plan was. They make them based on cost, confusion, and what options they can actually see.
When an employee loses their job and receives a COBRA notice, they're making a high-stakes financial decision under stress, with limited information, on a 60-day deadline. Most don't know that job loss triggers a special enrollment period for ACA marketplace plans. Most don't know they might qualify for subsidies that bring their premium to near zero. Most don't know that marketplace plans can be queried by their current doctors and medications to find coverage that preserves their care relationships.
That's the gap worth closing. Not richer COBRA subsidies. Not better election notices. Actual guidance that puts every option on the table and helps people make an informed choice.
Because the data is clear: when employees see the full picture, most of them choose something other than COBRA. They always have.
