Quick answer: after losing a job, you usually have two main options. COBRA lets you keep your exact employer plan, generally for up to 18 months, but you can be charged up to 102 percent of the full premium, including the share your employer used to pay. A Marketplace plan through HealthCare.gov or your state exchange may cost much less if you qualify for premium tax credits based on your income. Losing job-based coverage opens a 60-day Special Enrollment Period for the Marketplace, and you have at least 60 days to elect COBRA. COBRA tends to make sense if you have met much of your deductible or need specific doctors; the Marketplace tends to win on price.
Losing a job is stressful enough without worrying about health insurance. Yet the coverage decision has real money at stake, and the deadlines are firm. Understanding the two main options and how they compare can save you hundreds or thousands of dollars and prevent a dangerous gap in coverage.
This guide explains how COBRA and Marketplace coverage work, compares them side by side, walks through deadlines and the tricky rules for switching, and ends with a decision checklist. For a broader overview of how health insurance works, see our complete health insurance guide.
This is general information, not legal or tax advice. Sources: U.S. Department of Labor, Employee Benefits Security Administration, An Employee’s Guide to Health Benefits Under COBRA; HealthCare.gov pages on job loss, Special Enrollment Periods, COBRA and premium tax credits; Medicaid.gov. Rules differ for state exchanges and state continuation laws. Checked October 2026. Questions about this article: hello@proinsuranceinfo.com.
What Is COBRA?
COBRA, short for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that lets workers and their families keep their employer’s group health coverage for a limited time after certain events, such as job loss or reduced hours.
Who it covers
According to the Department of Labor, COBRA generally applies to group health plans of private-sector employers with 20 or more employees, and to state and local government plans. Many states have “mini-COBRA” laws that extend similar rights to employees of smaller employers.
How long it lasts
- Job loss or reduced hours: generally up to 18 months.
- Disability: an extension to 29 months may be available if a qualified beneficiary is disabled, under specific rules.
- Other events for family members, such as divorce or the death of the employee: up to 36 months.
What it costs
Under COBRA, the plan can charge you up to 102 percent of the total cost of coverage. That total includes the portion your employer used to pay, plus a 2 percent administrative fee. For many people, the monthly bill is several times what they paid as an employee.
The big change is the employer contribution. While you had a job-based plan, your employer likely paid a large share of the premium. COBRA continuation coverage is the same health insurance plan, but you now pay the full cost yourself, plus up to a 2 percent administrative fee.
Key deadlines
- Your employer must notify the plan administrator of your qualifying event, and the plan must send you an election notice.
- You have at least 60 days from the later of the date of the notice or the date coverage would end to elect COBRA.
- You then have 45 days after electing to pay the first premium.
- Coverage is retroactive to the date you lost employer coverage if you elect and pay on time.
The retroactive feature means you can wait during the election window and elect only if you need care, though that strategy carries risks if you miss a deadline.
What Is Marketplace Coverage?
The Health Insurance Marketplace, run through HealthCare.gov or your state’s exchange, sells individual and family plans that follow Affordable Care Act rules. All plans cover essential health benefits and cannot deny you or charge more because of pre-existing conditions.
The Special Enrollment Period for job loss
Losing job-based coverage qualifies you for a Special Enrollment Period. According to HealthCare.gov, you can enroll up to 60 days before or 60 days after losing coverage. If you lose coverage, apply as soon as possible to avoid a gap.
Financial help
Premium tax credits lower monthly premiums for people with qualifying household incomes who do not have access to affordable employer coverage. Cost-sharing reductions lower deductibles and copays for eligible enrollees in Silver plans. The amount depends on your estimated income for the year, household size and local plan prices. Because you may have little income for the rest of the year after a layoff, you may qualify for more help than you expect. Subsidy rules have changed in recent years, so preview current prices on HealthCare.gov or your state exchange.
Unemployment benefits generally count as income when estimating Marketplace eligibility. Report any changes in income during the year so your tax credit stays accurate.
Metal tiers
Marketplace plans come in Bronze, Silver, Gold and Platinum tiers, which differ in how costs are split between you and the plan. Our explainer on ACA Marketplace metal tiers covers the differences.
Marketplace health insurance plans sold on the ACA Marketplace (HealthCare.gov or your state’s marketplace) must cover essential health benefits, including many preventive services such as recommended screenings and vaccines at no cost to you when you use an in-network provider. Plan selection comes down to the monthly premium, deductible, out-of-pocket maximum and, just as important, the provider network.
COBRA vs Marketplace: Side-by-Side
| Factor | COBRA | Marketplace plan |
|---|---|---|
| Same plan and doctors | Yes | Usually different plan and network |
| Typical cost | Up to 102% of full premium | Varies; may be lower with tax credits |
| Financial help | None from the federal government | Premium tax credits and cost-sharing reductions if eligible |
| Deductible progress | Keeps what you have paid this year | Starts over with the new plan |
| Duration | Generally up to 18 months | As long as you stay eligible and pay |
| Enrollment window | At least 60 days to elect | 60 days before or after losing coverage |
| Coverage start | Retroactive to loss of coverage | Typically first of the month after you select a plan |
Provider Networks and Ongoing Treatment
If you or a family member are in the middle of ongoing treatment, such as pregnancy, cancer care or management of a chronic condition, network matters as much as price. COBRA keeps your current health insurance coverage exactly as it was: same doctors, same network, same prescription list, and the deductible and out-of-pocket amounts you have already met this year still count.
A new Marketplace plan starts fresh. Your deductible resets, and the plan’s provider network may not include your current doctors or hospital. Before you choose, search each Marketplace plan’s directory for your doctors, check the drug formulary for your prescriptions, and call the provider’s office to confirm they take the plan.
COBRA vs Marketplace: When COBRA May Be the Better Choice
- You have met much of your deductible or out-of-pocket maximum. Switching resets your progress.
- You are in the middle of treatment, such as pregnancy, cancer care or a planned surgery, and want to keep the same doctors.
- You need specific specialists or hospitals that are not in local Marketplace networks.
- Your income is too high for subsidies and Marketplace premiums would cost about the same.
- You expect a new job soon and want a short bridge with no change in doctors. Note that many employer plans have a waiting period before new coverage starts.
- Your former employer is paying some or all of the COBRA premium as part of a severance package.
COBRA vs Marketplace: When the Marketplace May Be the Better Choice
- Your income for the year will be lower, making you eligible for premium tax credits.
- COBRA premiums are too expensive for your budget.
- You are early in the year and have not paid much toward your deductible.
- Your doctors are in-network with a Marketplace plan.
- You expect to be without employer coverage for a long time.
Medicaid and CHIP
If your income drops significantly, you or your children may qualify for Medicaid or the Children’s Health Insurance Program. Eligibility depends on your state and is based on current monthly income, so a layoff can make you eligible right away. You can apply at any time of year, not just during enrollment periods. When you apply through the Marketplace, your application is also checked for Medicaid and CHIP eligibility.
Special Situations
Family members on your plan
Each qualified beneficiary, including a spouse and dependent children who were covered, has an independent right to elect COBRA. That means you can mix options. For example, a spouse in the middle of treatment could keep COBRA while the rest of the family moves to a Marketplace plan, or children could move to CHIP. Compare costs for each person.
For family coverage, each covered family member who qualifies can elect COBRA on their own. Some families keep COBRA for one person in treatment and move everyone else to a lower-cost Marketplace plan.
Retiree and older workers
If you are 65 or older or close to it, Medicare rules interact with COBRA in complicated ways. In general, COBRA does not replace the need to sign up for Medicare on time, and delaying Medicare enrollment can lead to late enrollment penalties. Check Medicare.gov before relying on COBRA past age 65.
Severance packages
Some employers subsidize COBRA premiums for a few months as part of severance. Read the agreement carefully: note when the subsidy ends, and plan your next step before the full premium kicks in.
Health savings accounts
If you had a health savings account (HSA), the money is yours to keep. HSA funds can generally be used tax-free to pay COBRA premiums and health insurance premiums while you receive unemployment compensation, according to IRS rules. Check IRS Publication 969 for details.
Switching Between COBRA and the Marketplace
The rules for switching are where many people get tripped up.
Dropping COBRA early
According to HealthCare.gov, if you voluntarily drop COBRA or stop paying premiums outside of Open Enrollment, you generally will not qualify for a Special Enrollment Period. You may have to wait until the next Open Enrollment to get a Marketplace plan.
When COBRA runs out
If your COBRA coverage ends because you reach the end of the coverage period, that qualifies you for a Special Enrollment Period.
During Open Enrollment
You can switch from COBRA to a Marketplace plan during annual Open Enrollment, which on HealthCare.gov typically runs from November 1 to January 15. State exchanges may set different dates. Our guide to open enrollment and special enrollment periods explains the timelines.
If your employer stops paying COBRA
If your former employer was contributing to COBRA premiums and stops completely, that may qualify you for a Special Enrollment Period. Check the current rules on HealthCare.gov.
Real-World Comparison Example
These are hypothetical numbers for illustration only.
Jordan is laid off in April. While employed, Jordan paid $150 a month for individual coverage, and the employer paid $500. Under COBRA, the full cost plus 2 percent is $663 a month.
Jordan has already paid $1,400 toward a $2,000 deductible. Jordan expects little income for the rest of the year and checks HealthCare.gov. With premium tax credits, a Silver plan comes to a much lower monthly premium, but the deductible restarts.
If Jordan has an ongoing condition and expects to reach the out-of-pocket maximum this year, COBRA may cost less overall. If Jordan expects few medical bills, the Marketplace plan likely saves money. Running both numbers, premiums plus expected out-of-pocket costs, is the best way to decide.
COBRA vs Marketplace: Step-by-Step Decision Checklist
- Note your coverage end date. Ask HR exactly when your employer coverage stops.
- Watch for your COBRA election notice and record the deadline.
- Estimate your income for the year, including severance and unemployment benefits.
- Preview Marketplace plans on HealthCare.gov or your state exchange to see prices after tax credits.
- Check networks and drug lists for your doctors, hospitals and prescriptions.
- Compare total yearly costs: premiums plus expected deductibles, copays and coinsurance.
- Check Medicaid or CHIP if your income has dropped significantly.
- Decide within the deadlines. Missing the 60-day windows can leave you uninsured until the next Open Enrollment.
- Plan for a new job. Know when new employer coverage would start, so you can time the end of COBRA or Marketplace coverage.
For more about what happens to coverage when you leave a job, see how long health insurance lasts after termination and how health insurance works when switching jobs.
Common Mistakes to Avoid
- Missing the 60-day Marketplace window while waiting to decide on COBRA.
- Dropping COBRA mid-year without realizing it may not trigger a Special Enrollment Period.
- Ignoring deductible progress when comparing costs.
- Forgetting to update income with the Marketplace when you start a new job, which can lead to repaying excess tax credits at tax time.
- Not checking networks, which can mean losing access to current doctors.
Frequently Asked Questions
How long do I have to elect COBRA?
You have at least 60 days from the later of the date you receive the election notice or the date your coverage would end. Coverage is retroactive if you elect and pay on time.
Can I get a Marketplace plan if I am eligible for COBRA?
Yes. Being eligible for COBRA does not stop you from buying a Marketplace plan and getting premium tax credits if you qualify. You have 60 days before or after losing coverage to enroll.
Can I switch from COBRA to the Marketplace later?
You can switch during Open Enrollment or when COBRA runs out. Voluntarily dropping COBRA mid-year usually does not qualify you for a Special Enrollment Period.
Is COBRA always more expensive?
Not always. COBRA premiums are usually high, but if you have met your deductible or need specific doctors, COBRA may cost less overall.
Does unemployment income affect Marketplace subsidies?
Yes. Unemployment benefits generally count as income when estimating eligibility for premium tax credits.
Does COBRA keep my deductible progress?
Yes. COBRA is a continuation of the same plan, so amounts you have already paid toward this year’s deductible and out-of-pocket maximum still count. A new Marketplace plan starts at zero.
Can I get financial assistance with COBRA?
Not through the Marketplace. Premium tax credits and other financial assistance apply only to Marketplace health insurance, not COBRA. Some employers pay part of COBRA as part of a severance package, so ask.
Sources
- U.S. Department of Labor, EBSA: An Employee’s Guide to Health Benefits Under COBRA.
- HealthCare.gov: Losing job-based coverage; COBRA coverage and the Marketplace; Special Enrollment Periods; Premium tax credits.
- Medicaid.gov: Eligibility.
