Quick answer: choose COBRA if you are mid-treatment or expect a new job with benefits within a few months, because it keeps your same plan, doctors and deductible progress. Choose an ACA Marketplace plan (also called Obamacare) if your income dropped or you will be out of work for more than a few months, because subsidies can cut the monthly cost well below the full COBRA premium. You have 60 days to decide either way.

COBRA vs ACA at a glance

	COBRA	ACA Marketplace (Obamacare)
What you get	Your old employer plan, unchanged	A new individual plan (Bronze, Silver, Gold or Platinum)
Monthly cost	Up to 102% of the full premium (what you and your employer paid, plus a 2% fee)	Based on the plan and your income; subsidies may lower it
Subsidies	None	Premium tax credits depend on your expected income for the year
Doctors and network	Same as before	Varies by plan; check your doctors first
How long	Usually up to 18 months	As long as you keep paying, renewed each year
Deadline	60 days to elect	Special Enrollment Period of 60 days after losing coverage

Sources: U.S. Department of Labor (COBRA continuation coverage) and HealthCare.gov (Special Enrollment Period after losing job-based coverage).

What is COBRA?

COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you continue your employer's health plan after leaving, usually for up to 18 months. The catch is the price: you pay the full premium, including the share your employer used to cover, plus up to a 2% administrative fee. Employer-sponsored family coverage often totals roughly $2,000 a month or more, so a COBRA bill for a family can be a shock.

COBRA Pros

• Keep your exact same coverage
• Keep your same doctors and network
• Deductible and out-of-pocket progress for the year carries over
• Good for ongoing treatments

COBRA Cons

• Expensive: you pay the whole premium plus the fee
• No subsidies available
• Temporary (18 months in most cases)

The companion book

Laid Off: The 90-Day Recovery Plan

by Jordan Hale

How to negotiate your severance, protect your money and health coverage, and land a better job, laid out as a 90-day plan.

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What is ACA Marketplace (Obamacare) insurance?

The Affordable Care Act marketplace (HealthCare.gov or your state exchange) sells individual plans, with premium tax credits based on your expected income. Losing job-based coverage qualifies you for a Special Enrollment Period, so you do not have to wait for the yearly open enrollment.

ACA Pros

• Subsidies can dramatically reduce costs if your income dropped
• Coverage is not time-limited
• Several plan levels (Bronze, Silver, Gold, Platinum)
• Layoff qualifies you for a Special Enrollment Period

ACA Cons

• May need to switch doctors
• Different networks and coverage
• Your deductible starts over

How to decide: a quick framework

Choose COBRA if:

• You are in the middle of treatment with a specific doctor
• You expect a new job with benefits within 2-3 months
• Your employer subsidizes COBRA (some do as part of severance; ask)
• Your income is too high for ACA subsidies

Choose ACA if:

• Your layoff significantly reduced your income
• You expect to be unemployed for 3+ months
• You are flexible about changing providers
• COBRA premiums are unaffordable

The math: an illustrative example

Say your COBRA premium is $1,800 a month for family coverage. Over 6 months that is $10,800.

If your expected household income this year is $60,000 after the layoff, you might find an ACA Silver plan at $400-600 a month after subsidies, or $2,400-$3,600 over 6 months. That would be a savings of roughly $7,200-$8,400. These figures are an example, not a quote: enter your own income and zip code at HealthCare.gov for real prices.

Important deadlines

• COBRA: you have 60 days from the later of your coverage ending or the date on your election notice to elect COBRA. Once you elect, your first premium is due within 45 days, and coverage is retroactive to the day your old plan ended.
• ACA: you can enroll in a Marketplace plan up to 60 days before or 60 days after losing job-based coverage. Pick a plan before the month starts for coverage to begin the first of the next month.

The bridge strategy, and the trap to avoid

Because COBRA is retroactive, you do not have to elect it the day you are laid off. If you stay healthy during the 60-day window, you can look at Marketplace prices first and only elect COBRA if you need care. The trap: once you elect COBRA and then drop it voluntarily, that does not open a Special Enrollment Period, so you may have to wait for open enrollment to move to the Marketplace. Compare both before you elect.

COBRA alternatives

If COBRA is too expensive, your options are an ACA Marketplace plan, a spouse's or partner's employer plan (losing coverage is a qualifying event there too), Medicaid if your income is low enough in your state, and, for people under 26, a parent's plan. Check each against your doctors and prescriptions.

COBRA vs ACA FAQ

Is COBRA or Obamacare cheaper?

Usually the Marketplace plan, if your income dropped, because subsidies apply to Marketplace plans and never to COBRA. COBRA can be cheaper only if your income is too high for subsidies or your employer pays part of it.

Can I switch from COBRA to the ACA Marketplace later?

Not freely. Dropping COBRA on your own does not open a Special Enrollment Period. You can switch at the yearly open enrollment, or earlier if COBRA ends or your employer stops contributing.

How long do I have to choose between COBRA and ACA?

60 days for each. The clocks run at the same time, so start comparing in your first week.

Does COBRA coverage start right away?

Coverage is retroactive to the day your employer plan ended, as long as you elect within 60 days and pay your first premium within 45 days of electing.