COBRA vs. marketplace insurance: how to choose when you lose job coverage

Losing your job (or leaving voluntarily) means losing your employer-sponsored health insurance. You have two main options: COBRA or marketplace insurance. You have roughly 60 days to decide, and the choice matters.

What COBRA is

COBRA lets you keep your exact employer health plan after leaving a job. You pay the full premium: your share plus what your employer was covering, plus an administrative charge. The plan may charge up to 102% of what the coverage costs it, per the Department of Labor's worker's guide to COBRA.

The shock is arithmetic. Your employer was paying a large share of that premium and now you are. As an example, if the plan cost $900/month in total and your payroll deduction was $200, your COBRA cost is roughly $918, not $200. Family coverage lands proportionally higher. Your COBRA election notice states your actual figure.

COBRA lasts 18 months for job loss (36 months for dependents in certain situations).

What marketplace insurance is

The ACA marketplace (healthcare.gov or your state exchange) offers plans from private insurers. Losing job-based coverage triggers a Special Enrollment Period, so you have 60 days to enroll.

The key variable: income-based subsidies. Eligibility for premium tax credits is tied to income as a percentage of the federal poverty level. Healthcare.gov shows the current thresholds and what you would actually pay.

This changed for 2026. The enhanced premium tax credits that had been in place since 2021 expired on December 31, 2025. Two things followed: households above 400% FPL (roughly $63,000 for an individual, or $129,000 for a family of four) no longer receive any premium tax credit at all, and average net premiums for subsidized enrollees rose sharply. KFF's analysis puts the average monthly payment net of tax credits at $178 in 2026, up from $113.

So the comparison is no longer automatic. Marketplace coverage may still cost far less than COBRA, or it may not. It depends entirely on where your income falls. There is no substitute for pulling your own number.

When COBRA makes sense

You have ongoing medical needs. If you're mid-treatment, have scheduled procedures, or are managing chronic conditions with specific in-network specialists, the disruption of switching plans may be costly. COBRA preserves your current plan and provider network.

You'll return to employer coverage quickly. If you're between jobs and expect new employer benefits to kick in within 1–3 months, COBRA provides a seamless bridge, especially if you have upcoming medical needs.

The deductible year. If you've already met your deductible for the year (say, it's November and you've paid $3,000 toward your deductible), switching plans resets your deductible. COBRA preserves what you've already paid.

Your income makes marketplace plans expensive. If your income is high enough that you don't qualify for meaningful subsidies, the marketplace cost may be comparable to COBRA, and COBRA keeps your same plan.

When marketplace insurance makes sense

You may be eligible for income-based subsidies. If your projected annual income falls below 400% FPL, you may still save substantially on marketplace coverage. Above that line, as of 2026, you would pay the full premium. Check healthcare.gov or your state exchange for your actual estimate. It is the only number that matters here.

You're generally healthy. If you don't have in-progress treatments or critical specialists, switching to a marketplace plan with an in-network provider network is usually fine.

You want a fresh deductible year. Counterintuitively, if it's late in the year and you haven't met your deductible, switching to a marketplace plan lets you start a new deductible year for January, which is not necessarily worse than staying on COBRA.

COBRA election is retroactive

One thing many people don't know: COBRA election is retroactive. You have 60 days from the qualifying event, or from receiving your COBRA notice, to elect, and electing later still covers the gap, provided you pay all back premiums.

That is a real feature of the rules, not a loophole, and it is why the 60-day window matters more than the first day of it: it gives you time to compare options properly rather than electing under pressure.

It is not a reason to treat the window as free coverage. Until you elect and pay, you are uninsured, and a gap you don't backfill is one you pay for out of pocket. Confirm your exact dates on your COBRA election notice, since they are specific to your qualifying event.

The decision framework

• Get a marketplace subsidy estimate first. Before assuming anything, check your actual subsidy on healthcare.gov. Since the enhanced credits expired at the end of 2025, the gap between marketplace and COBRA is much more income-dependent than it was. For some households it is still large, for others it has closed.
• Weigh continuity of care. Are you mid-treatment? Do you have a surgery scheduled? Is your specialist impossible to replace? Continuity may matter more than the premium difference.
• Compare actual plan quality. COBRA keeps your old plan; marketplace plans vary. Compare deductibles, out-of-pocket maximums, and provider networks.
• Consider the tax credit. Marketplace premium tax credits are refundable, so if you pay too much during the year you get a refund. If you pay COBRA, there's no refund.

LifQ helps you track your coverage transitions, COBRA election windows, and marketplace enrollment deadlines so you don't miss a critical window.

Your policy documents are the authority on what you have, and your carrier, plan administrator, or a licensed agent is the authority on what to change. LifQ's job is making sure you walk into that conversation knowing exactly what you already own.