COBRA vs. Marketplace: Which Is Cheaper After You Lose Your Job?

When employer coverage ends, the COBRA paperwork usually arrives first. It feels like the default, so a lot of people take it without checking the alternative. That single decision is one of the most expensive defaults in personal finance.

What COBRA actually costs

COBRA lets you keep your existing employer plan after leaving. The coverage is identical: same network, same deductible, same card. What changes is who pays.

While employed, your employer likely covered a large share of the premium and you only saw your portion on your paycheck. With COBRA you pay the entire premium, both shares, plus an administrative fee of up to 2 percent. That is why the number is so startling. Nothing about the plan got more expensive. You simply started seeing the full price for the first time.

COBRA generally lasts up to 18 months, with longer periods in certain situations.

What the marketplace offers instead

Losing job-based coverage is a qualifying life event. It opens a 60 day special enrollment period to buy an individual marketplace plan, and that clock starts when your coverage ends.

The critical difference is subsidies. Premium tax credits are based on your expected income for the year, and if you just lost your job, your projected income may be far lower than it was. Households between 100 and 400 percent of the federal poverty level can qualify for 2026. Many people who were nowhere near eligible while employed become eligible the moment their income drops.

COBRA has no equivalent. There is no subsidy, no sliding scale, no income adjustment.

So which one wins?

For most people who have lost income, a subsidized marketplace plan costs dramatically less. But COBRA genuinely wins in a few situations, and we would rather you know them than assume marketplace is always right.

COBRA is often the better choice when

• You have already met your deductible this year. Switching plans resets it to zero. If you have paid down 5,000 dollars of a deductible in October, starting over in November can cost more than the COBRA premium.
• You are mid-treatment. Ongoing care, a scheduled surgery, or a pregnancy with an established care team is worth protecting. COBRA keeps everything exactly as it is.
• Your specialists are hard to match. If your doctors do not appear in any individual plan network in your area, continuity may outweigh the savings.
• The gap is very short. If new employer coverage starts in a few weeks, COBRA for one month can be simpler than enrolling twice.

The marketplace usually wins when

• Your income has dropped enough to qualify for a meaningful credit.
• You are early in the plan year and have not spent much toward your deductible.
• You are generally healthy and your doctors are available in individual plan networks.
• You expect the gap to last more than a couple of months.

Two timing traps

First, the 60 day window is firm. Miss it and you may be stuck waiting for open enrollment, which can leave you uninsured for months.

Second, and this one catches people, voluntarily dropping COBRA later does not create a new special enrollment period. Exhausting COBRA at the end of its term does, but choosing to cancel it mid-stream generally does not. If you elect COBRA and then discover a marketplace plan would have been cheaper, you may have to wait until the next open enrollment to switch. Compare before you elect, not after.

A quick way to decide

1. Find your total COBRA premium in the election notice. Use the full monthly figure, not your old paycheck deduction.
2. Estimate your income for the rest of the calendar year, not last year earnings.
3. Check what a subsidized marketplace plan would cost at that income with our savings estimator.
4. Add what you have already paid toward your current deductible. That amount is at risk if you switch.
5. Compare total expected annual cost, not monthly premium.

Do not guess on this one

This decision has a deadline and it is difficult to reverse. Our advisors will run both scenarios with your actual numbers, check whether your doctors are in network, and tell you honestly which way the math falls, even when the answer is COBRA. There is no cost, and we are licensed in 31 states. Get a comparison.