COBRA or a marketplace plan?

The COBRA letter arrives a week or two after you leave a job, and the number on it is usually the shock.

That is not because COBRA is a scam. It is because you are seeing the real cost of your coverage for the first time. Your employer was paying most of it and you were only seeing your share.

You have a choice here, and it has a deadline. This page covers what each option gives you and which situations favor which.

Why the number is so high

Employer health coverage is expensive. Most people never see the full price because the company covers a large portion of it.

COBRA lets you keep exactly the same plan after you leave. Same network, same deductible, same everything. What changes is that you now pay the entire premium yourself, plus a small administrative fee.

Nothing about your coverage got worse. You are just seeing what it always cost.

What COBRA gives you

Continuity. Same plan, same doctors, same network, no interruption.

Your deductible carries over. This is the one people forget, and it can matter enormously. If you have already met most of your deductible this year, starting a new plan means starting that over from zero. In a year with significant medical costs, that can outweigh a lower premium.

Certainty. You know exactly what is covered because you have been using it.

What a marketplace plan gives you

Usually a lower premium, and often dramatically lower.

Subsidy eligibility, which COBRA does not have. This is the piece people miss. If your income has dropped because you left a job, you may qualify for help you would not have qualified for while employed. That comparison is between COBRA at full price and a marketplace plan after a subsidy, not before.

Choice. You can pick a plan that fits your actual situation rather than the one your employer selected for a whole workforce.

The deadline nobody explains clearly

Losing employer coverage opens a special enrollment window for marketplace plans. You do not have to wait for open enrollment.

That window is limited, and it runs from when your coverage ends. You can often apply before the old plan actually terminates, which avoids a gap.

Two things that catch people out.

Being offered COBRA does not close your marketplace window. You can compare both.

But if you elect COBRA and then drop it voluntarily later, or let it lapse for nonpayment, that generally does not open a new window. You would wait for open enrollment.

So the comparison is best done at the start, not after a few months of COBRA payments.

Which situations favor which

COBRA tends to make sense if you have met most of your deductible this year, if you are mid-treatment with a specialist you cannot change, if the gap is short and a new plan would start soon anyway, or if your household income has not dropped enough to qualify for meaningful help.

A marketplace plan tends to make sense if your income dropped when the job ended, if you are early in the plan year with little spent toward the deductible, if the COBRA premium is not sustainable for however long you need it, or if you are heading into a stretch of several months or more without employer coverage.

Neither is right in general. The answer depends on your deductible, your doctors, your income, and how long you need coverage.

What to compare, specifically

Not just the premiums. Run both across a full year.

• The monthly cost of each, with any subsidy applied to the marketplace side.
• How much of your deductible you have already met, and what starting over would cost you.
• Whether your doctors are in network on the marketplace plan. This is checkable in advance, by name.
• Whether your prescriptions are covered, and at what tier.
• The out-of-pocket maximum on each, which is the number that matters if something serious happens.
• How long you actually need coverage. A two-month gap and a two-year gap are different decisions.

Common questions.

Compare both before the window closes

A licensed advisor will run COBRA against the marketplace plans available where you live, check your doctors and prescriptions, and tell you which one actually costs less over the year.

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