COBRA Insurance Texas & Open Enrollment 2025: What Houston Employers Need to Know

Open enrollment for 2025 happens between November 1st and December 15th, 2025, for 2026 coverage. For Houston employers, this is a time of reviewing benefits and understanding what employees need. As you dive into what your employees need during this special time of year, the topic of COBRA insurance in Texas might rise to the top of your questions.

To help you get a better understanding of Texas COBRA insurance, we’ve put together a quick guide about the subject and what it means during Open Enrollment.

Ready for a new group health insurance plan in Texas? Learn how PCIS can help.

What is Texas COBRA Insurance and How Does It Work?

The Consolidated Omnibus Budget Reconciliation Action (COBRA) is a temporary continuation of health coverage after job loss or reduced hours.

COBRA is a federal law that gives employees and their families the right to continue their employer-sponsored health insurance coverage after certain qualifying events caused them to lose it, including the following events:

• Divorce
• Death of the covered employee
• Aging out of dependent coverage
• Job loss
• Reduction in hours

Texas employers with more than 20 employees must comply with Federal COBRA laws, while smaller ones may follow Texas “mini-COBRA” laws.

If an employee is eligible for COBRA coverage because they meet one or more of these qualifying events, they get to keep the exact same group health plan they had while employed. Let’s look at what that means more closely.

How Does COBRA Insurance Work?

For Employers

Employers in Texas with more than 20 employees who offer group health insurance are legally required to provide COBRA continuation coverage.

They must notify eligible employees of their COBRA rights, ensure benefits remain identical to active employee coverage, and handle enrollment and premium collection. Employers must comply with strict deadlines and documentation requirements. Failure to do so can result in IRS penalties or Department of Labor fines.

For Employees

COBRA insurance allows workers and their dependents to keep their employer-sponsored health coverage after a qualifying event such as job loss, reduced hours, divorce, or the death of the covered employee.

It provides the same health benefits as before, typically for 18 months, though dependents may qualify for up to 36 months. Employees must pay the full premium cost, including the portion previously covered by the employer, plus an administrative fee of up to 2%. They have 60 days to enroll after losing coverage, and can lose COBRA coverage early if they miss payments or gain new health coverage.

COBRA and Open Enrollment in Texas:  Why it Matters in 2025

Understanding Open Enrollment in Texas

Open enrollment is the annual period when employees can review, renew, or change their health insurance coverage. In Texas, the open enrollment period for 2025 runs from November 1, 2024, through January 15, 2025, giving individuals and families the opportunity to update their plans or choose new coverage through their employer or the federal Health Insurance Marketplace. This period is especially important for those comparing open enrollment in Texas options to find affordable health coverage that fits their needs.

How COBRA Interacts with Open Enrollment

If you’re on COBRA insurance, open enrollment offers a new opportunity to switch from COBRA to another health plan, without waiting for your COBRA coverage to expire. This can be particularly beneficial if COBRA premiums are too high or if you’ve reached the end of your employer’s coverage period. During open enrollment, ex-employees can:

• Transition from COBRA to a new marketplace plan
• Compare available options for better pricing or coverage
• Avoid a gap in coverage by enrolling before their COBRA plan ends

Texas Small Business Health Insurance and COBRA

For Texas small business health insurance providers, understanding COBRA’s role is essential.  While federal COBRA applies to companies with 20 or more employees, many smaller employers in Texas may be subject to state “mini-COBRA” laws that offer similar continuation of rights for workers.

Small business owners should communicate these options clearly to departing employees and consider how COBRA costs affect overall benefits planning. Maintaining compliance not only supports employees but also protects businesses from potential fines or penalties.

The Cost of COBRA Insurance for Employers and Employees

Understanding the Cost of COBRA Insurance

When it comes to the cost of COBRA insurance, most employees are surprised by how much they pay once their employer stops contributing.

Under federal law, individuals who choose COBRA coverage typically pay 102% of the premium. That’s the full cost of their previous employer-sponsored plan plus a small 2% administrative fee. For many, this means paying several hundred dollars per month to maintain the same health benefits they had while employed.

While COBRA can be a safety net, it’s usually more expensive than coverage through a spouse’s plan or the federal Marketplace. That’s why many ex-employees use COBRA temporarily while exploring lower-cost, long-term options.

The Employer’s Perspective

For employers, COBRA doesn’t usually involve paying the premiums directly, but it does come with administrative and compliance responsibilities. Businesses must notify employees of their COBRA rights, manage enrollment timelines, and track premium payments accurately. Failing to follow these rules can result in costly IRS and Department of Labor penalties—up to $100 per day per affected individual in some cases.

Partnering with a broker like PCIS to help manage transitions cost-effectively is a smart decision. Check out our group health insurance information to learn more.

Get Help Managing COBRA and Open Enrollment in 2025

Open enrollment is a great time of year to review your group health plans and ensure COBRA compliance for your entire company.

At Primary Car Insurance Solutions, we help small businesses in Houston identify and set up the best group health insurance plans for their team. We also help simplify renewals, reduce costs, and ensure you stay compliant with Texas insurance regulations.

Contact our team today to get help during open enrollment 2025 for COBRA insurance and more.

Questions About COBRA Insurance Texas

How much will COBRA cost?

The cost of COBRA insurance in Texas is typically around 102% of your previous health plan’s total premium for employees. This includes both your contribution and your employer’s share, plus a 2% administrative fee. However, employers generally don’t pay the cost of COBRA coverage for former employees. Instead, the employee pays the full premium amount, which includes both the employer and employee share of the original plan. Employers are responsible for managing the administrative process, including sending timely notices, tracking payments, and ensuring compliance. This creates indirect costs if handled in-house.

Can you cancel COBRA at any time?

Yes. Employees can cancel COBRA at any time they want by notifying the plan administrator. For employers, COBRA cancellation should be properly documented to avoid coverage disputes. Once an employee cancels COBRA, the employer’s obligation to maintain coverage under that plan ends.

Are COBRA payments deductible?

Employers do not typically deduct COBRA payments since the cost is paid by the former employee, not the company. However, administrative expenses related to managing COBRA, such as compliance tools or broker fees, may be considered business expenses and are often deductible. Consult with our team to learn more.

Can COBRA be retroactive?

Yes. COBRA is retroactive to the date the employee lost their group health insurance coverage, as long as the employee elects COBRA within the 60-day window and pays all back premiums.  For employers, this means ensuring that all election notices are sent promptly, and that systems are in place to process retroactive reinstatements without disrupting coverage.

Want more information about group health insurance in Texas? Check out our buyer’s guide here.