COBRA vs ACA Marketplace: Which Health Insurance Is Right For You?
Lost your job-based health insurance? Here's how to choose between COBRA continuation coverage and ACA marketplace plans - with real cost comparisons.
The Bottom Line
For most people, ACA marketplace plans are cheaper than COBRA because you can get subsidies based on your reduced income. But COBRA might make sense if you're mid-treatment, expect to get a new job quickly, or have high income.
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Table of Contents
Quick Comparison: COBRA vs ACA
| Feature | COBRA | ACA Marketplace |
|---|---|---|
| Monthly Cost (Family) | $1,500-$2,500+ | $0-$800 with subsidies |
| Subsidies Available? | No | Yes (income-based) |
| Keep Same Doctors? | Yes (same plan) | Maybe (check networks) |
| Coverage Gap? | None (retroactive) | Possible short gap |
| Duration | 18 months max | Unlimited (renew yearly) |
| Enrollment Deadline | 60 days from notice | 60 days from job loss |
| Deductible Reset? | No | Yes (new plan year) |
| Pre-existing Conditions | Covered | Covered |
What is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you temporarily continue your employer's group health plan after you lose your job. You keep the exact same coverage - but you pay the full premium yourself.
COBRA Pros
- Same coverage: Keep your exact plan, network, and benefits
- Same doctors: No need to switch providers mid-treatment
- No gap: Coverage is retroactive to job loss date
- Deductible carries over: If you've met your deductible, it stays met
- Pre-existing conditions: No new underwriting
- Decision time: 60 days to decide (can enroll retroactively)
COBRA Cons
- Expensive: Full premium + 2% admin fee (avg $656/mo single, $1,867/mo family)
- No subsidies: You pay the full unsubsidized cost
- Temporary: Only lasts 18 months (36 for some qualifying events)
- Employer dependent: If employer goes bankrupt, coverage can end
- Not for small employers: Companies with <20 employees not required to offer
How COBRA Pricing Works
When employed, you might pay $200/month for family coverage while your employer pays $1,600. With COBRA:
- You pay: $1,800/month ($1,800 premium + 2% = $1,836)
- No employer subsidy: The full cost is now on you
- Sticker shock: Most people don't realize how much their employer was paying
What is the ACA Marketplace?
The ACA Marketplace (Healthcare.gov or your state exchange) offers individual health insurance plans with potential subsidies based on your income. Losing job-based coverage qualifies you for a Special Enrollment Period.
ACA Pros
- Subsidies: Premium tax credits based on income (can be $0/month)
- Cost-sharing reductions: Lower deductibles on Silver plans for qualifying incomes
- Permanent: Keep coverage as long as you pay (renew yearly)
- Plan choice: Multiple insurers and plan levels
- Pre-existing conditions: Must be covered
- Income-based: Lower income = bigger subsidies
ACA Cons
- Different network: Your doctors may not be in-network
- Deductible reset: Start over on a new plan
- Coverage gap: May not start immediately
- Complexity: Many plan options to compare
- Annual renewal: Must re-enroll each year
- No subsidy if high income: Full price above ~400% FPL
Understanding ACA Plan Levels
Bronze
60% coverage
Lowest premium
Highest deductible
Silver
70% coverage
CSR eligible
Most popular
Gold
80% coverage
Higher premium
Lower deductible
Platinum
90% coverage
Highest premium
Lowest deductible
Real Cost Comparison: COBRA vs ACA
Here's what the math looks like at different income levels for a family of 4:
| Projected Annual Income | COBRA (18 mo) | ACA Silver Plan | Savings w/ ACA |
|---|---|---|---|
| $40,000 | $33,048 ($1,836/mo) | $0-$1,800 | $31,000+ |
| $60,000 | $33,048 ($1,836/mo) | $3,600-$7,200 | $26,000+ |
| $80,000 | $33,048 ($1,836/mo) | $7,200-$12,600 | $20,000+ |
| $100,000 | $33,048 ($1,836/mo) | $12,600-$18,000 | $15,000+ |
| $150,000+ | $33,048 ($1,836/mo) | $21,600-$28,800 | $4,000-$11,000 |
Key Insight: Income Drops After Layoff
ACA subsidies are based on your projected annual income for the current year. If you earned $150,000/year but got laid off in March, your projected income for the year might only be $50,000 (3 months salary + unemployment).
That lower projected income qualifies you for much larger subsidies.
When COBRA Makes Sense
1. You're Mid-Treatment
If you're in the middle of cancer treatment, pregnancy, or managing a complex condition, switching insurance mid-stream could mean changing doctors, re-authorizing treatments, or coverage disputes. COBRA keeps everything the same.
2. You've Already Met Your Deductible
If you've already paid $5,000+ toward your annual deductible, switching to a new ACA plan means starting over. Run the numbers - keeping COBRA for the rest of the year might save money.
3. You Expect a New Job Soon
If you're confident you'll have new employer coverage within 2-3 months, COBRA provides seamless transition. You can even wait to enroll (60-day window) and only pay if you actually need care.
4. Your Employer Subsidizes COBRA
Some companies pay for COBRA as part of severance packages. If your employer is covering all or part of the premium, COBRA becomes much more attractive.
5. Your Income Is Too High for ACA Subsidies
If your household income exceeds ~400% of the Federal Poverty Level (~$124,800 for family of 4 in 2026), you won't get ACA subsidies. At that point, compare unsubsidized ACA plans to COBRA.
When ACA Makes Sense
1. Your Income Dropped Significantly
ACA subsidies are based on projected annual income. If your income will be much lower this year due to layoff, you could qualify for substantial subsidies - potentially $0/month premiums.
2. You'll Be Job Searching for 3+ Months
COBRA costs add up fast. At $1,800/month, that's $16,200 over 9 months. ACA with subsidies could cost $2,000-$5,000 for the same period.
3. You're Flexible About Doctors
If you don't have an ongoing treatment relationship with specific doctors, switching to an ACA plan is relatively painless. Many ACA plans include major hospital systems.
4. Your Employer's Plan Wasn't Great Anyway
Some employer plans have high deductibles and limited networks. A subsidized ACA Silver plan might actually be better coverage than what you had.
5. You Want Long-Term Coverage
COBRA expires after 18 months. If you might be self-employed, retiring early, or facing an extended job search, ACA provides permanent coverage (as long as you pay).
Other Alternatives to COBRA
COBRA and ACA aren't your only options. Consider these alternatives:
Spouse's Employer Plan
Your job loss qualifies as a "life event" that allows your spouse to add you to their employer plan - even outside open enrollment.
- Deadline: Usually 30 days from your job loss
- Cost: Often the most affordable option
- Action: Have your spouse contact their HR immediately
Medicaid
If your income drops low enough, you may qualify for Medicaid (free or very low-cost coverage).
- Income limit: ~$20,000-$40,000 depending on family size and state
- Expansion states: Higher limits in states that expanded Medicaid
- No deadline: Apply anytime through Healthcare.gov or your state
Short-Term Health Insurance
Temporary coverage lasting 3-12 months. Much cheaper than COBRA but with significant limitations.
- Warning: May not cover pre-existing conditions
- Warning: Limited benefits, caps on coverage
- Best for: Healthy individuals who need brief gap coverage
Health Sharing Ministries
Not insurance, but faith-based cost-sharing arrangements.
- Warning: Not regulated as insurance
- Warning: May exclude pre-existing conditions
- Warning: No guarantee claims will be paid
Professional Association Plans
Some industry associations offer group health plans to members.
- Examples: Freelancers Union, professional associations
- Compare: May or may not be cheaper than ACA
Critical Deadlines
Don't Miss These Deadlines
Missing a deadline can leave you uninsured. Mark these on your calendar.
COBRA Deadlines
- Employer notification: 30 days after termination
- COBRA election: 60 days from COBRA notice
- First payment: 45 days after election
- Ongoing payments: 30-day grace period each month
- Coverage duration: 18 months (can be 36 for some events)
ACA Deadlines
- Special Enrollment Period: 60 days from job loss
- Coverage start: First of month after enrollment
- Open Enrollment: Nov 1 - Jan 15 annually
- Spouse plan deadline: Usually 30 days
The COBRA "Wait and See" Strategy
You have 60 days to elect COBRA. If you get sick during that time, you can elect COBRA retroactively and it covers you back to your job loss date. This is risky but can save money if you stay healthy. If you choose ACA, you lose this option.
Decision Framework: Which Should You Choose?
Answer These Questions:
1. What's your projected income this year?
Count salary earned so far + severance + unemployment + any other income expected.
- Under ~$60,000 (family of 4) → ACA likely much cheaper
- $60,000-$100,000 → ACA likely cheaper
- Over $125,000 → Compare both carefully
2. Are you mid-treatment for a serious condition?
- Yes → Lean toward COBRA to keep doctors
- No → ACA is fine
3. Have you met your deductible this year?
- Yes, most of it → Consider COBRA through year-end
- No → ACA reset doesn't hurt you
4. How long do you expect to be job searching?
- Under 3 months → COBRA might be worth the convenience
- 3-6 months → ACA likely saves significant money
- 6+ months → ACA strongly recommended
5. Is your employer paying for COBRA?
- Yes, fully → Take COBRA (it's free)
- Partially → Compare subsidized COBRA to ACA
- No → ACA usually wins on cost
Quick Decision Rule
If you don't have a specific reason to keep COBRA (mid-treatment, high deductible already met, employer paying, very short job search), the ACA marketplace is almost always cheaper.
Next Steps
To Compare ACA Plans:
- 1. Go to Healthcare.gov
- 2. Create an account
- 3. Enter your projected income for the year
- 4. See plans and subsidies you qualify for
- 5. Check if your doctors are in-network
To Evaluate COBRA:
- 1. Wait for COBRA notice from employer
- 2. Note the full monthly premium
- 3. Calculate 18-month total cost
- 4. Compare to ACA options
- 5. Decide within 60 days