Losing your job is stressful enough. Figuring out health insurance on top of it shouldn’t be. If your coverage came through your employer, you usually have two main options: keep your old plan through COBRA, or switch to an ACA Marketplace plan.
Here’s how they compare, and how to tell which one is likely cheaper for you.
What COBRA is
COBRA is a federal law that lets you keep your employer’s health plan for a while after you leave. You keep the same insurance card, the same doctors, and the same deductible progress.
The catch is the price. While you were working, your employer probably paid a big share of your premium. With COBRA, you pay the full premium yourself, plus up to a 2% administrative fee. That can be a shock.
The basics:
- Coverage usually lasts up to 18 months (longer in some situations).
- You generally have 60 days to decide whether to elect COBRA after you get your notice or lose coverage, whichever is later.
- If you elect it, coverage is retroactive back to the day your old coverage ended.
- Smaller employers may be covered by a state version of COBRA with different rules.
What an ACA Marketplace plan is
The ACA Marketplace (HealthCare.gov, or your state’s exchange) sells individual health plans. All of them cover essential health benefits and pre-existing conditions.
The big difference is financial help. Depending on your expected household income for the year, you may qualify for a premium tax credit that lowers your monthly payment. Some people also qualify for lower deductibles and copays.
And losing job-based coverage gives you a Special Enrollment Period, so you don’t have to wait for Open Enrollment. You can enroll up to 60 days before or 60 days after your coverage ends.
Side-by-side comparison
| COBRA | ACA Marketplace plan | |
|---|---|---|
| Monthly cost | Full premium + up to 2% | Varies; may be lowered by a tax credit based on income |
| Financial help | None from the government | Premium tax credits and cost-sharing reductions if eligible |
| Doctors and network | Same as before | Depends on the plan you choose |
| Deductible progress | Keeps what you’ve already paid this year | Starts over |
| Pre-existing conditions | Covered | Covered |
| How long | Usually up to 18 months | As long as you keep paying, renewing each year |
| When you can enroll | Within your COBRA election window | 60-day Special Enrollment Period, or Open Enrollment |
So which is cheaper?
For many people, a Marketplace plan costs less than COBRA, especially if your income drops after the job loss and you qualify for a tax credit. But COBRA can come out ahead in some cases:
COBRA may make sense if:
- You’ve already met most of your deductible or out-of-pocket max this year.
- You’re in the middle of treatment, pregnancy, or care with specific doctors you can’t risk losing.
- Your household income is high enough that you won’t get a tax credit, and your old plan is a good value.
- You expect to start a new job with benefits soon.
A Marketplace plan may make sense if:
- Your household income for the year will be lower without the job.
- You’re healthy and haven’t used much of your deductible.
- Your doctors are in-network on a Marketplace plan.
- You need coverage for longer than COBRA would last.
The only way to know for sure is to compare real quotes with your actual numbers.
The mistake to avoid
This one catches a lot of people. If you choose COBRA and later drop it on purpose, or stop paying, that does not open a Special Enrollment Period. You’d have to wait until the next Open Enrollment to get a Marketplace plan.
You can switch from COBRA to a Marketplace plan during Open Enrollment (November 1 to January 15 for most states), or when your COBRA coverage runs out on its own.
So if you think a Marketplace plan might be the better deal, compare before you elect COBRA, while your 60-day window is open.
Estimating your income in a job-loss year
Your tax credit is based on your expected household income for the whole calendar year. That includes:
- What you earned before the job ended
- Any severance pay
- Unemployment benefits
- A spouse’s income
- Income from a new job, if you expect one
If you’re unsure, give your best realistic estimate. You’ll settle up when you file taxes, so it’s worth updating the Marketplace if your income changes during the year. Note that if you’re enrolled in COBRA, you can’t get a premium tax credit for those same months.
What about short-term plans?
You may see ads for short-term medical plans as a low-cost bridge. They can work for some people with a short gap, but short-term and limited medical plans are not ACA-compliant coverage. They may deny or exclude pre-existing conditions, skip major benefits, cap what they’ll pay, and you can’t use a tax credit toward them. For most people losing job coverage, the Marketplace Special Enrollment Period is the safer first look.
Let us run the numbers
Blue Liberty Health’s licensed agents can compare your COBRA cost against ACA and private options side by side, at no cost to you. Fill out the quick form with your ZIP code and household details, and we’ll show you what you’d actually pay before your deadline.
This article is for general information and isn’t tax, legal, or medical advice. Plan availability, prices, and financial help depend on your state, income, and household. Blue Liberty Health is not affiliated with HealthCare.gov or any government agency.