When a job with health insurance ends, you usually have two ways to stay covered: keep the same plan through COBRA, or buy a plan on the marketplace. Either can be the right call. The deadlines are short and they don't all forgive a change of mind, so it helps to know the rules before the first bill arrives.
COBRA: the same plan, at full price
- COBRA applies to group health plans at private employers that had at least 20 employees on more than half of their typical business days in the previous year, and to most state and local government plans. It does not cover federal government or church plans. Many states have similar “mini-COBRA” laws for employers with fewer than 20 employees; your state insurance department can tell you whether one applies.
- You get at least 60 daysto decide whether to take it, and at least 45 days after electing to make the first payment. Depending on the plan's rules, coverage can be backdated to the day your job coverage ended.
- The premium can be up to 102% of the plan's total cost: your old share, the share your employer used to pay, plus 2%.
- After a job ends or hours are cut, COBRA generally lasts up to 18 months.
- It is the same plan active employees have: the same co-pays, deductibles and limits, and any change the employer makes to the plan applies to you too.
The price is the shock. Say your share was $150 a month and your employer paid another $550. The plan's total cost is $700, so COBRA can charge you up to $714 a month.
The marketplace: a new plan, maybe with help
Losing job-based coverage opens a Special Enrollment Period, whatever the reason the job ended, even if you quit or were fired. You have 60 days from losing that coverage to pick a plan, and coverage can start the first day of the next month. You can apply even while COBRA is on offer.
The draw is the premium tax credit. A marketplace application tells you what you qualify for. It is based on your household's income for the whole calendar year, including what you earned before the job ended. If your income is low enough, you may qualify for Medicaid or CHIP instead, which you can apply for at any time.
COBRA and the premium tax credit
- Being offered COBRA doesn't count against you. Unlike an offer from a current employer, you can turn COBRA down, even if it would be affordable, and still get a credit on a marketplace plan.
- Being enrolled in COBRA does. You can't get a credit for marketplace coverage for yourself while you are enrolled in COBRA.
For how the credit is worked out, and the 400% income cutoff that applies for 2027, see how ACA subsidies work. If you are moving to a new job with its own plan, its offer is judged by a different test; see is your job's health plan “affordable”?
Switching later: the trap
Choosing COBRA first and moving to the marketplace later is possible, but only at certain times:
- During marketplace open enrollment, for any reason.
- Within the original 60 days after your job coverage ended.
- When COBRA runs out, or you lose it involuntarily before then, for example because the employer stops offering the plan. You then get 60 days.
- If your former employer stops paying part of the COBRA premium, or a government subsidy for it ends, and you have to pay the full cost.
Dropping COBRA on purpose is not a qualifying event: If you cancel COBRA early, or simply stop paying for it, outside open enrollment, you can't switch to a marketplace plan until the next open enrollment, unless something else happens that qualifies, like a move, a marriage or a new baby. Decide within the first 60 days if you can.
Comparing the two on total cost
The premium is only part of the comparison. Three things often tip it:
- What you have already paid this year.COBRA keeps the credit you have built toward the plan's deductible. A marketplace plan is a new plan with its own deductible, so late in the year, after a costly stretch, COBRA's remaining out-of-pocket exposure can be much smaller.
- Your doctors and drugs. COBRA is the same plan, so the same network and drug list. A marketplace plan's network may not include your doctors; check before you switch (see how to check your doctors and drugs).
- How long you need it. A bridge of a month or two to a new job is a different question from a year or more without one.
To put numbers on it, upload the plan's Summary of Benefits and Coverage to the plan document analyzer, which estimates a year of costs based on typical usage, and price marketplace plans in your state on the plan explorer.
Sources: U.S. Department of Labor: A Worker's Guide to Health Benefits Under COBRA; 26 CFR 54.4980B-5 (deductibles under COBRA); HealthCare.gov: if you lose job-based health insurance; HealthCare.gov: COBRA coverage and the Marketplace; IRS: premium tax credit questions and answers; IRS Publication 974; 45 CFR 155.420 (special enrollment periods).