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 a 2% administrative fee.

The shock: most employers subsidize 70–80% of the premium. If your employer was covering $700/month and you paid $200, your COBRA cost is approximately $918/month ($900 + 2%). For a family plan, COBRA costs of $1,500–$2,500/month are not unusual.

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 — you have 60 days to enroll.

The key variable: income-based subsidies. If your income is between 100–400% of the federal poverty level (or even higher, under the current enhanced subsidies), you may qualify for premium tax credits that dramatically reduce marketplace premiums.

For 2026, enhanced subsidies mean many people pay $0–$100/month for marketplace coverage. This makes the comparison stark: $0–$100/month marketplace vs. $900–$2,500/month COBRA.

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 and disruptive. 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 qualify for income-based subsidies. This is the most common reason. If your projected annual income falls below 400% FPL (or higher, depending on current subsidy rules), you may save hundreds per month on marketplace coverage. Check healthcare.gov or your state exchange to see your subsidy estimate.

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 — not necessarily worse than staying on COBRA.

The wait-and-see strategy

Here's something many people don't know: you can elect COBRA retroactively. You have 60 days from the qualifying event (or from receiving the COBRA notice) to elect coverage. During that time, you're technically uninsured — but if you incur medical expenses during the window, you can retroactively elect COBRA and have those bills covered.

This allows you to: shop marketplace options thoroughly, see if you need care in the interim, and only pay COBRA premiums if you actually need them.

Important: This strategy only works if you pay all back premiums upon election. And going without coverage carries risk.

The decision framework

• Get a marketplace subsidy estimate first. Before assuming COBRA is necessary, check your subsidy on healthcare.gov. If the marketplace plan costs $100/month vs. $1,200/month COBRA, the decision is often straightforward.
• Evaluate continuity needs. Are you mid-treatment? Do you have a surgery scheduled? Is your specialist impossible to replace? Continuity may outweigh cost.
• 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 — 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.