How Does COBRA Work in Texas? Costs, Deadlines, Mini-COBRA

If you lose job-based health insurance in Texas, you can usually keep the same plan for a limited time by paying the full premium yourself. That’s how COBRA works in Texas: federal COBRA applies when your former employer had 20 or more workers, and a state law commonly called Texas mini-COBRA covers you when the employer was smaller.¹² Either way, deadlines are short and unforgiving, and the price is a jolt because you’re now paying the share your employer used to pay.

Which Law Covers You

Federal COBRA applies to private-sector employers that had 20 or more employees on a typical business day during the previous calendar year.¹ If your former workplace was smaller than that, Texas Insurance Code Chapter 1251 provides a shorter but similar continuation right.²

To qualify under either law, you have to have been enrolled in the group plan on the day before the event that cost you coverage. Spouses and dependent children who were on the plan get their own separate right to continue. One hard exclusion applies: an employee fired for gross misconduct can be denied continuation coverage entirely.¹

What Triggers COBRA

For the employee, two events open the door: termination of employment (voluntary or involuntary, other than for gross misconduct) and a reduction in hours that drops you below the plan’s eligibility threshold.¹

Spouses and dependents have more triggers, and their coverage can run longer. Death of the covered employee, divorce or legal separation, a dependent child aging out of the plan, or the employee becoming entitled to Medicare each entitle the affected family members to up to 36 months of continuation.¹

The 60-Day Election Window

After a qualifying event, your employer has 30 days to notify the plan administrator, and the administrator has another 14 days to send you a formal COBRA Election Notice with your rights, coverage options, and deadlines.³

You then have at least 60 days to elect coverage.¹ The clock runs from the later of the day your coverage actually ended or the day you received the election notice. Do nothing in that window and you permanently lose the right. There is no second chance.

Fill the election form out carefully. List every dependent you want covered by full legal name and Social Security number. Certified mail with return receipt gives you proof of timely submission if the administrator later disputes the date, and many plans also accept elections through an online portal.

What It Costs and When to Pay

You pay the full group premium: 100% of the plan cost, including the share your employer used to pay, plus a 2% administrative fee, for a total of 102%.⁴ Most employees never see the employer’s portion on their pay stubs, so the first COBRA bill often comes in at two to four times what came out of a paycheck.

Two payment deadlines matter after you elect. Your first premium is due within 45 days of the date you elect, and it must cover every month from the day employer coverage ended up through the current period. After that, each monthly payment gets a 30-day grace period from its due date. Miss the grace period once and coverage terminates permanently, with no reinstatement. If your plan is briefly deactivated while a payment is being processed, you may have to pay out of pocket for prescriptions or care and seek reimbursement once the account catches up.

If you qualify for the disability extension described below, the premium during those extra months can go up to 150% of the plan cost instead of 102%.³

How Long Coverage Lasts

Under federal COBRA, job loss or a reduction in hours gives you up to 18 months. Family events like divorce, a child aging out, or the employee’s death allow up to 36 months for the affected spouse and dependents.¹

If the Social Security Administration determines that a qualified beneficiary was disabled before the 60th day of COBRA coverage and the disability continues, everyone on that COBRA plan gets an 11-month extension, for a total of 29 months. You must notify the plan of the SSA determination to claim it, and the plan can cut the extension short if SSA later reverses the finding.³

A second qualifying event during the initial 18 months can push dependents out to 36 months total. If you lose your job and then divorce while on COBRA, for example, your former spouse’s coverage extends to 36 months from the original event. The second event has to be one that would have caused a loss of coverage on its own.³

Texas mini-COBRA works differently. If your employer was too small for federal COBRA, state continuation gives you up to 9 months from the date you elect. If you did have federal COBRA, you can add 6 months of state continuation on the back end after federal COBRA expires, so long as you’re otherwise still eligible.²

Whichever program you’re on, coverage ends early if you miss a payment, enroll in another group plan through a new employer, or become entitled to Medicare.

Cheaper Alternatives Worth Checking First

Losing employer coverage opens a 60-day Special Enrollment Period to buy a plan on the ACA Marketplace. Even after you elect COBRA, you can still switch to a Marketplace plan during that original SEP, provided the 60 days from your loss of employer coverage haven’t run.⁵

The price difference can be significant. Marketplace plans may qualify for premium tax credits if your household income falls between 100% and 400% of the federal poverty line.⁶ COBRA premiums never qualify for those credits. If cost is your main concern and you don’t have specific providers you need to keep, compare Marketplace prices before you commit.

Watch a timing trap. If you voluntarily drop COBRA outside that initial 60-day window and outside Marketplace Open Enrollment, you generally can’t get a new SEP and will have to wait for the next Open Enrollment. When COBRA runs out on its own, exhausting the coverage triggers a fresh SEP.⁵

If you have a Health Savings Account, you can use those funds tax-free to pay COBRA premiums. That’s one of the few exceptions to the general rule that HSA money can’t cover insurance premiums, and the IRS also allows tax-free HSA distributions for health coverage while you’re receiving unemployment compensation.⁷

If You’re Eligible for Medicare, Don’t Wait

COBRA is not treated as employer coverage for Medicare purposes, so it doesn’t shield you from Medicare’s late enrollment penalties. The Part B penalty is 10% added to your monthly premium for every full year you could have signed up and didn’t, and it lasts for life. In 2026, the standard Part B premium is $202.90 a month; delaying two years would add a permanent 20% surcharge, pushing the monthly cost to roughly $243.50.⁸

If you’re Medicare-eligible and haven’t enrolled, COBRA may end up paying only a fraction of your care, leaving you responsible for most of the bill.⁹ Enroll in Medicare when eligible and treat COBRA as a supplement, if you keep it at all. Once COBRA ends, you have two months to join a Medicare Advantage or drug plan through a Special Enrollment Period.¹⁰

What Happens If Your Former Employer Goes Bankrupt

If your former employer files Chapter 7 and liquidates, the group health plan will almost certainly be terminated. Once all of an employer’s health plans are gone, COBRA continuation is no longer available, and you’ll need other coverage.¹¹ That loss triggers a Marketplace SEP.

A Chapter 11 reorganization is less severe. If the employer keeps at least one health plan running while it restructures, you may be able to continue coverage under the remaining plan. Contact the plan administrator as soon as you learn of any bankruptcy filing and ask directly whether COBRA will still be offered.¹¹

1
Office of the Law Revision Counsel. 26 USC 4980B – Failure to Satisfy Continuation Coverage Requirements of Group Health Plans
2
Texas Department of Insurance. Title 28 Insurance – Adopted Rules for Group Continuation Coverage
3
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
4
U.S. Department of Labor. Continuation of Health Coverage (COBRA)
5
Centers for Medicare and Medicaid Services. COBRA Coverage and the Marketplace
6
Internal Revenue Service. Eligibility for the Premium Tax Credit
7
Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
8
Medicare.gov. Avoid Late Enrollment Penalties
9
Medicare.gov. COBRA Coverage
10
Medicare.gov. Special Enrollment Periods
11
U.S. Department of Labor. Your Employer’s Bankruptcy – How Will It Affect Your Employee Benefits