COBRA vs ACA Health Insurance After Layoff: Which to Choose

One of the most stressful parts of losing a job is figuring out health insurance. You've probably heard of COBRA and the ACA marketplace—but which one should you choose? The wrong decision could cost you thousands of dollars or leave you without critical coverage when you need it most.

This comprehensive guide breaks down all your options so you can make the right decision for your situation, whether you're dealing with ongoing medical treatment, managing a tight budget, or simply trying to bridge a short gap in coverage.

Your Options at a Glance

When you lose employer-sponsored health insurance, you typically have five main options:

Option	Best For	Approximate Cost	Coverage Duration
COBRA	Short gaps, ongoing treatment	$400-$2,000+/month	Up to 18 months
ACA Marketplace	Most people, especially if income-eligible	$0-$800/month	Indefinite
Medicaid	Lower income individuals	$0	Indefinite
Spouse's Plan	If available	Varies	Ongoing
Short-term Insurance	Healthy, short gap	$100-$300/month	Up to 12 months

Let's dive deeper into each option so you can understand which makes the most sense for your unique circumstances.

What is COBRA? (Complete Guide)

COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you continue your employer's health insurance plan after you leave. While it sounds convenient, it comes with significant costs that surprise most people.

How COBRA Works in Detail

COBRA is a federal law that applies to employers with 20 or more employees. It gives you the right to continue your group health coverage for a limited time after certain qualifying events, including involuntary or voluntary job loss.

Key COBRA Features:

• You keep the exact same coverage you had while employed—same insurance company, same plan, same policy number
• You pay the full premium (what you paid + what your employer paid + up to 2% admin fee)
• Coverage lasts up to 18 months (36 months in certain circumstances like disability or secondary qualifying events)
• You have 60 days to decide whether to enroll after receiving your COBRA notice
• Coverage is retroactive to your termination date if you elect within the 60-day window
• Your employer must send you a COBRA election notice within 14 days of your coverage ending
• COBRA covers you, your spouse, and dependent children who were on your employer plan

Important Timeline Details:

The 60-day clock starts either when you lose coverage OR when you receive the COBRA election notice, whichever is later. This is crucial because it means you don't have to decide immediately. You can explore other options first and use COBRA as a safety net.

COBRA Costs: The Reality Check

Here's what shocks most people: COBRA is expensive because you're now paying what your employer used to subsidize.

Real-World Example:

• Your monthly paycheck deduction: $300
• What your employer paid: $1,200
• Administrative fee (2%): $30
• Total COBRA cost: $1,530/month

For family coverage, costs can easily exceed $2,000 per month. Most people were unaware their employer was covering 70-85% of their health insurance costs.

Why COBRA is So Expensive:

During employment, employers typically pay 70-85% of health insurance premiums as a benefit. When you go on COBRA, you assume 100% of that cost plus a 2% administrative fee. This is legal and standard, but it makes COBRA one of the most expensive health insurance options available.

COBRA Extended Coverage Periods

While most people qualify for 18 months of COBRA, certain situations extend this:

• 36 months: For dependents who lose coverage due to divorce, legal separation, death of employee, or loss of dependent status
• 29 months: If you become disabled (as determined by Social Security) within the first 60 days of COBRA coverage
• Additional months: If you experience a second qualifying event while on COBRA

COBRA Pros: When It Makes Sense

✅ Zero disruption in care — Same doctors, same coverage, no changes whatsoever
✅ No enrollment restrictions or waiting periods — Coverage continues seamlessly
✅ Pre-existing conditions fully covered — No questions asked about health status
✅ Ideal for ongoing treatment — Perfect if you're in the middle of treatment with specific providers
✅ Can enroll retroactively — Wait and see strategy: only pay if you actually need care during the 60-day window
✅ Includes all benefits — Dental, vision, FSA/HSA access (if applicable), prescription coverage all continue
✅ Same deductibles and out-of-pocket maximums — If you've already met your deductible for the year, COBRA preserves that progress

COBRA Cons: Major Drawbacks

❌ Extremely expensive — You pay full cost plus admin fee with no employer subsidy
❌ Limited to 18 months — Eventually you'll need another solution
❌ No subsidies available — Your income level doesn't matter; no financial assistance exists
❌ Tied to former employer's choices — If they change plans or carriers, you're affected
❌ Risk of employer bankruptcy — If your former employer goes out of business, COBRA could terminate early
❌ Monthly premium volatility — Premiums can increase during your COBRA period

COBRA Strategic Use: The Safety Net Approach

Here's a strategy many savvy consumers use:

1. Don't immediately elect COBRA when you receive the notice
2. Enroll in ACA marketplace coverage to start immediately
3. Keep your COBRA election window open (you have 60 days)
4. If a medical emergency occurs during that 60-day period, elect COBRA retroactively
5. Pay back-premiums to cover the emergency, then you can switch back to ACA

This approach gives you affordable coverage while maintaining a safety net. However, note that if you elect COBRA retroactively, you'll owe all back-premiums from your coverage end date.

What is ACA Marketplace Insurance? (Complete Guide)

The Affordable Care Act (ACA) marketplace—accessible through Healthcare.gov or your state's exchange—offers individual health insurance plans with potential subsidies based on your income. For most people who've lost job-based coverage, this is the most affordable option.

How ACA Marketplace Works in Detail

The ACA marketplace was created to provide health insurance access for individuals who don't have employer coverage. Losing job-based coverage triggers a Special Enrollment Period (SEP), which means you don't have to wait for the annual Open Enrollment period.

Key ACA Marketplace Features:

• You choose from multiple plans at different price points offered by various insurers
• Subsidies (Premium Tax Credits) are available based on your projected annual income
• Losing your job qualifies you for Special Enrollment—you have 60 days to enroll
• Plans are categorized by metal tier: Bronze (60% coverage), Silver (70%), Gold (80%), Platinum (90%)
• All plans cover essential health benefits including preventive care, emergency services, prescription drugs, mental health services, and maternity care
• No medical underwriting — You cannot be denied coverage or charged more based on health status
• Coverage can continue indefinitely as long as you pay premiums

Understanding Metal Tiers

The metal tier system can be confusing. Here's what it really means:

• Bronze Plans: Lowest monthly premiums, highest deductibles (often $6,000-$8,500). Good for healthy people who rarely need care.
• Silver Plans: Moderate premiums and deductibles. Best value for most people, especially those eligible for Cost-Sharing Reductions (CSR).
• Gold Plans: Higher premiums, lower deductibles (often $1,000-$3,000). Good if you need regular care or prescriptions.
• Platinum Plans: Highest premiums, lowest out-of-pocket costs. Rare but useful if you have significant ongoing medical needs.

ACA Costs and Subsidies Explained

Without subsidies: $300-$800+/month for an individual (varies significantly by age, location, and plan)

With subsidies: Potentially $0-$200/month or even free with enhanced subsidies

The key factor determining your subsidy is your Modified Adjusted Gross Income (MAGI) for the year. This includes:

• Wages and salary
• Unemployment benefits
• Severance pay
• Investment income
• Alimony received
• Social Security benefits (partially)

Subsidy Eligibility:

For 2025, you may qualify for subsidies if your household income is between 100% and 400% of the Federal Poverty Level (FPL). Thanks to enhanced subsidies through the Inflation Reduction Act (extended through 2025), even those above 400% FPL may receive some assistance.

2025 Federal Poverty Levels (approximate):

• Individual: $15,060
• Family of 2: $20,440
• Family of 3: $25,820
• Family of 4: $31,200

If you're unemployed for several months, your annual income might be much lower than expected, qualifying you for substantial subsidies.

Cost-Sharing Reductions (CSR)

If your income is below 250% of FPL and you choose a Silver plan, you qualify for Cost-Sharing Reductions. These reduce your deductibles, copays, and out-of-pocket maximums—not just your monthly premium. CSRs are only available on Silver plans, making them often the best value for lower-income individuals.

ACA Pros: Why Most People Choose This

✅ Often much cheaper than COBRA — Especially with subsidies, can be 50-80% less expensive
✅ Multiple plan options — Choose coverage that fits your budget and healthcare needs
✅ Subsidies available based on income — Can reduce costs to nearly zero for eligible individuals
✅ Pre-existing conditions covered — No medical underwriting or exclusions
✅ Can keep coverage indefinitely — Not limited to 18 months like COBRA
✅ Standalone dental and vision — Optional additional coverage for children and adults
✅ Quality coverage — All plans must cover essential health benefits mandated by law
✅ Tax credits applied monthly — Don't have to wait until tax time to benefit from subsidies

ACA Cons: Potential Challenges

❌ May need to change doctors/networks — Your current providers may not be in-network
❌ Different coverage than employer plan — Deductibles, copays, and formularies will differ
❌ Requires estimating annual income — Get it wrong and you may owe money back at tax time
❌ Plan changes restricted — Can only switch plans during Open Enrollment or with qualifying event
❌ Provider network research required — You must verify your doctors accept your chosen plan
❌ Subsidy reconciliation at tax time — If your income changes significantly, you may owe back tax credits

Understanding Income Estimation for ACA Subsidies

This is where many people get tripped up. When you apply for ACA coverage, you must estimate your income for the entire year, not just the remaining months.

Mid-Year Layoff Example:

Let's say you were laid off in July 2025:

• Salary earned January-July: $50,000
• Severance pay: $10,000
• Unemployment benefits (August-December): $12,000
• Total estimated 2025 income: $72,000

You'd enter $72,000 as your estimated annual income, and your subsidy would be calculated based on that amount.

If You Find a New Job:

You must report income changes to the marketplace within 30 days. Your subsidy will be adjusted accordingly. Don't worry—if you received more subsidy than you should have, you'll reconcile when filing taxes, and payment plans are available.

Tip: It's better to slightly overestimate income than underestimate. Owing back subsidies at tax time can be a financial shock.

Medicaid: The Option Many People Overlook

Medicaid is a state-federal program that provides free or very low-cost health coverage to eligible low-income individuals and families. If your income has dropped significantly due to job loss, you might qualify—and Medicaid is typically the best option if you're eligible.

Medicaid Eligibility

Eligibility varies by state, but generally:

Expansion States (39 states + DC):

• Adults with household income up to 138% of FPL qualify
• For a single person in 2025: approximately $20,783/year
• For a family of four: approximately $43,056/year

Non-Expansion States:

• Eligibility is much more restrictive, often limited to pregnant women, children, disabled individuals, and extremely low-income parents
• Childless adults often don't qualify regardless of income

Medicaid Pros

✅ Free or very low cost — Often $0 premiums, minimal or no copays
✅ Comprehensive coverage — Often better than marketplace plans
✅ No deductibles — In most states, no deductible to meet
✅ Immediate coverage — Can be approved and effective within days
✅ Year-round enrollment — No waiting for enrollment periods
✅ No subsidy reconciliation — Unlike ACA tax credits, nothing to pay back

Medicaid Cons

❌ Limited provider networks — Not all doctors accept Medicaid
❌ State-specific variations — Coverage and benefits vary significantly
❌ Income restrictions — If you get a job, you may quickly become ineligible
❌ Stigma concerns — Some people feel uncomfortable enrolling in a "welfare" program (though you shouldn't—you paid taxes for this)

How to Apply for Medicaid

You can apply through:

1. Healthcare.gov — The marketplace application automatically screens for Medicaid eligibility
2. Your state's Medicaid website — Direct application to your state program
3. In person — At local Medicaid offices or community health centers

If you're eligible for Medicaid, you cannot receive ACA subsidies. The marketplace will redirect you to Medicaid enrollment.

Short-Term Health Insurance Plans

Short-term health insurance (also called temporary or gap insurance) is designed to provide temporary coverage during transitions. However, these plans are controversial and have significant limitations.

How Short-Term Plans Work

• Duration: Typically 1-12 months (varies by state; some states ban them entirely)
• Cost: $100-$300/month on average—much cheaper than ACA or COBRA
• Underwriting: You must answer health questions and can be denied for pre-existing conditions
• Coverage: Limited; doesn't have to cover essential health benefits
• No subsidies: You pay full price; no financial assistance available

What Short-Term Plans DON'T Cover

This is critical to understand:

❌ Pre-existing conditions (often nothing diagnosed in the past 5+ years)
❌ Maternity care
❌ Mental health and substance abuse treatment
❌ Prescription drugs (often limited or excluded)
❌ Preventive care and wellness visits
❌ Rehabilitation services

When Short-Term Plans Make Sense

Short-term insurance might work if:

• You're young and healthy with no pre-existing conditions
• You need catastrophic coverage only (major accident/emergency)
• You're between jobs for 1-3 months and confident about your health
• You've been denied or can't afford other options
• Your state allows these plans and they're regulated

When to Avoid Short-Term Plans

❌ You have any pre-existing conditions (even minor ones like high blood pressure)
❌ You take regular medications
❌ You're pregnant or planning to become pregnant
❌ You need comprehensive coverage
❌ You want preventive care coverage

Important: Short-term plans are NOT ACA-compliant. They don't count as qualifying coverage and don't protect you from tax penalties in states that have individual mandates.

COBRA vs ACA: Detailed Head-to-Head Comparison

Factor	COBRA	ACA Marketplace	Winner
Monthly Cost	$400-$2,000+ (no subsidies)	$0-$800 (with subsidies)	ACA
Coverage Continuity	Identical to employer plan	Different plan	COBRA
Doctor/Provider Network	Exact same network	May need to change	COBRA
Maximum Duration	18 months	Indefinite	ACA
Subsidies	None available	Yes, based on income	ACA
Pre-existing Conditions	Covered	Covered	Tie
Enrollment Deadline	60 days	60 days (SEP)	Tie
Deductible Continuity	Preserves progress	Resets to new plan	COBRA
Coverage Start	Retroactive if needed	Usually 1st of next month	COBRA
Dental/Vision	Included if you had it	Separate enrollment	COBRA
Prescription Formulary	Same as before	Varies by plan	COBRA

Which Should You Choose? Detailed Decision Framework

Choose COBRA If:

✅ You're in active treatment — Chemotherapy, physical therapy, ongoing specialist care
✅ You're pregnant — Continuity with your OB-GYN is valuable
✅ You've met your deductible — Already hit your $3,000 deductible in March? COBRA preserves that
✅ You expect a quick job change — New job with benefits in 1-3 months
✅ Your doctors don't accept marketplace plans — You have established relationships with specialists
✅ Cost is secondary to continuity — You have savings and prioritize seamless care
✅ Complex medication needs — Your prescriptions are on your current plan's formulary

Choose ACA Marketplace If:

✅ You want to minimize costs — Especially if you qualify for subsidies
✅ You're flexible about doctors — Willing to find new in-network providers
✅ Your job search may take time — Longer than 3-6 months
✅ Your income qualifies for subsidies — Lower annual income due to unemployment
✅ You want more plan options — Prefer to shop and compare
✅ You need long-term coverage — Beyond 18 months
✅ Your health is stable — No ongoing critical treatment

Choose Medicaid If:

✅ You qualify based on income — Below 138% FPL in expansion states
✅ You have minimal savings — Need free or nearly free coverage
✅ You're in an expansion state — Check your state's status
✅ You need comprehensive coverage — Often better than marketplace plans

Consider Short-Term Insurance Only If:

⚠️ You're healthy with no pre-existing conditions
⚠️ You need very brief coverage — 1-3 months maximum
⚠️ You can't afford other options — And you understand the risks
⚠️ You're willing to accept limited coverage — Catastrophic protection only

Advanced COBRA Strategy: The Retroactive Election

This is a powerful strategy that few people know about:

The Strategy:

1. Receive your COBRA notice but don't elect coverage immediately
2. Enroll in ACA marketplace coverage to start on the 1st of the following month
3. If nothing major happens, continue with cheaper ACA coverage
4. If you have a major medical event in the first 60 days, elect COBRA retroactively
5. COBRA coverage becomes retroactive to your termination date
6. Pay the back-premiums for COBRA and submit claims
7. After claims are processed, you could technically drop COBRA and return to ACA

Example:

• Laid off June 15, coverage ends June 30
• Enroll in ACA coverage starting July 1
• July premium: $200 (vs $1,500 for COBRA)
• July 20: Appendicitis, emergency surgery ($40,000 bill)
• July 25: Elect COBRA within 60-day window
• COBRA coverage retroactive to July 1
• Pay July COBRA premium ($1,500) plus any already-due premiums
• Submit surgery claim to COBRA insurance
• Total out-of-pocket: Much less than $40,000

Risks of This Strategy:

• You must pay ALL back-premiums (from coverage end date to election date)
• If you miss the 60-day deadline, you're stuck with ACA coverage and its networks
• Some people find this ethically questionable (though it's perfectly legal)
• Administrative hassle of managing timing and payments

How to Estimate Your ACA Subsidies (Step-by-Step)

Understanding your potential subsidy is crucial for making an informed decision.

Step 1: Calculate Your Estimated Annual Income

Add up all expected income for the year:

• Salary/wages earned before layoff
• Severance pay
• Unemployment benefits (these count!)
• Any freelance or side income
• Investment income (interest, dividends, capital gains)
• Any income from a new job (if you expect to find one)

Step 2: Determine Your Federal Poverty Level Percentage

Divide your income by the FPL for your household size.

Example: Single person, $30,000 income
$30,000 ÷ $15,060 (2025 FPL) = 199% of FPL

Step 3: Use the Healthcare.gov Calculator

Go to Healthcare.gov and:

1. Enter your ZIP code
2. Enter your household size
3. Enter your estimated income
4. Review estimated tax credits

Step 4: Compare Plans

The calculator will show:

• Monthly premium before subsidy
• Monthly subsidy amount
• Your monthly cost after subsidy
• Annual maximum out-of-pocket
• Deductibles

Step-by-Step: Enrolling in ACA Marketplace

Timeline: Complete within 60 days of losing coverage

Step 1: Gather Your Information

• Social Security numbers for all household members
• Income documentation (pay stubs, severance letter, unemployment award letter)
• Current employer coverage end date
• Information about any job offers or expected income

Step 2: Visit the Marketplace

• Federal: Healthcare.gov
• State exchanges: Check if your state runs its own (California, New York, Massachusetts, etc.)

Step 3: Create an Account

• Provide email and create password
• Set up security questions

Step 4: Start Your Application

• Select "I've lost my health coverage" as your reason for applying
• Enter your coverage end date (this triggers Special Enrollment)

Step 5: Complete the Application

• Household information
• Income information (be thorough and accurate)
• Current coverage information

Step 6: Review Your Eligibility Results

• See if you qualify for Medicaid or subsidies
• Note your subsidy amount

Step 7: Compare Plans

• Filter by doctor/hospital networks
• Compare premiums, deductibles, out-of-pocket maximums
• Check prescription drug coverage (formulary)
• Review provider directories

Step 8: Select Your Plan

• Choose the plan that best fits your needs and budget
• Consider Silver plans if you're eligible for CSR

Step 9: Enroll and Pay

• Complete enrollment
• Make your first month's premium payment
• Coverage typically starts the first of the following month

Pro Tip: If you apply by the 15th of the month, coverage can start the 1st of the next month. After the 15th, coverage starts the 1st of the month after next.

Step-by-Step: Enrolling in COBRA

Timeline: 60 days to elect coverage

Step 1: Wait for Your COBRA Notice

• Your employer must send within 14 days of coverage end
• Sent by mail to your last known address
• Contains coverage details, costs, and election instructions

Step 2: Review All Materials Carefully

• Note the exact monthly cost
• Review what's covered (medical, dental, vision)
• Check the election deadline date
• Understand the payment terms

Step 3: Calculate the True Cost

• Monthly premium × number of months you expect to need coverage
• Compare to ACA marketplace options
• Factor in your budget and savings

Step 4: Decide Within 60 Days

• You can wait the full 60 days before deciding
• Use this time to explore alternatives
• Consider the retroactive election strategy

Step 5: Complete the Election Form

• Fill out all required information
• Sign and date
• Keep a copy for your records

Step 6: Send Your Election Form

• Mail via certified mail (recommended) or as instructed
• Keep tracking information
• Note the postmark date (this is your election date)

Step 7: Pay Your Premiums

• You'll owe back-premiums from your coverage end date
• First payment typically due within 45 days of election
• Set up future payments to avoid lapses

Step 8: Confirm Coverage

• Request confirmation from the insurance company
• Verify coverage dates
• Get new insurance cards if needed

Special Situations and Considerations

If You Have Pre-Existing Conditions

Good news: Both COBRA and ACA marketplace plans must cover pre-existing conditions without exclusions or waiting periods. This should NOT be a factor in your decision under normal circumstances.

However, continuity of care might still matter:

• If you have established relationships with specialists
• If you're in the middle of a treatment protocol
• If your medications are working well under your current plan's formulary

In these cases, COBRA might be worth the extra cost for continuity, even though ACA would also cover your condition.

If You're Pregnant or Planning Pregnancy

Pregnancy adds complexity to your decision:

COBRA Advantages:

• Keep your current OB-GYN
• No changes to prenatal care routine
• Same hospital and delivery team
• Deductible progress preserved

ACA Marketplace Considerations:

• All plans must cover maternity care
• You'll likely need a new OB-GYN
• May need to change hospitals
• Fresh deductible (could be higher or lower)
• Potentially much cheaper monthly premiums

Recommendation: If you're in your second or third trimester, COBRA may provide valuable continuity. If you're in your first trimester or planning pregnancy, compare costs carefully—ACA might save you thousands.

If You Have a Spouse with Employer Coverage

Your spouse's job loss typically qualifies as a "qualifying life event" that allows you to enroll in their employer plan outside of open enrollment.

Steps:

1. Notify spouse's HR department immediately (usually 30-day window)
2. Provide proof of loss of coverage (termination letter, COBRA notice)
3. Complete enrollment paperwork
4. Coverage typically starts quickly (often within 2 weeks)

Cost Comparison:

• Spouse's employer plan: Often subsidized, potentially most affordable
• Family coverage might increase, but employer likely subsidizes
• Compare to COBRA and ACA costs

Tip: Even if you're already on your spouse's plan, notify HR about your job loss—it might trigger opportunities to change coverage levels.

If You Have Children

Covering children adds another layer:

COBRA:

• Dependents who were covered continue on same plan
• Same pediatricians and specialists
• Monthly cost covers entire family

ACA Marketplace:

• Children must be covered or you may face tax penalties (in some states)
• All plans cover pediatric services including dental and vision
• Children's Health Insurance Program (CHIP) might be available if income-eligible
• Coverage for children up to age 26

Medicaid/CHIP:

• Children often qualify at higher income levels than adults
• CHIP covers children in families with income too high for Medicaid but can't afford private insurance
• Income limits vary by state but can go up to 200-400% FPL

If You're Over 60 (But Not Yet 65)

You're in a tough spot: too young for Medicare but facing age-rated premiums.

Challenges:

• ACA marketplace premiums increase with age
• COBRA costs are the same regardless (based on group plan)
• You might pay 3x more than a 21-year-old for the same ACA plan

Strategies:

• Run the numbers carefully—COBRA might be competitive at your age
• Look for subsidies—they can dramatically reduce costs
• Consider your timeline to Medicare at 65
• If you're 64, COBRA could bridge you to Medicare

Medicare Timing:

• You're eligible for Medicare at 65
• You can (and should) enroll 3 months before your 65th birthday
• COBRA or ACA coverage should end when Medicare starts
• Don't drop coverage before Medicare begins

What NOT to Do (Critical Mistakes to Avoid)

❌ Don't Go Without Coverage

This is the biggest mistake. "I'm healthy, I'll skip coverage for a few months" is a gamble that can devastate your finances.

The Reality:

• Medical emergencies are unpredictable
• A single ER visit can cost $10,000-$50,000
• A serious diagnosis without insurance can mean bankruptcy
• You lose access to preventive care and prescriptions

Even if you're on a tight budget:

• Check for Medicaid eligibility
• Look for ACA subsidies
• Consider a high-deductible ACA Bronze plan (catastrophic protection)
• Use the COBRA safety net if needed

❌ Don't Miss the 60-Day Deadline

Both COBRA and ACA Special Enrollment have 60-day windows. Miss them and you're stuck until the next Open Enrollment Period (November-January).

Set Reminders:

• Calendar the deadline immediately upon receiving notices
• Set reminders at 30 days, 45 days, and 55 days
• Don't wait until the last minute

❌ Don't Forget About Dental and Vision

COBRA includes dental and vision if your employer plan included them. ACA marketplace plans typically require separate enrollment for dental and vision.

What to Do:

• Check if your current plan includes dental/vision
• If switching to ACA, budget for separate dental and vision plans
• Standalone dental plans on the marketplace: $15-$50/month
• Vision plans: $10-$30/month

❌ Don't Ignore Subsidies

Many people assume they won't qualify for ACA subsidies, but you might be surprised.

Who Often Qualifies:

• Anyone laid off mid-year (reduced annual income)
• People receiving unemployment benefits only
• Those between jobs for several months
• Families with one income earner now unemployed

Even if you earned $80,000 before the layoff:
If you're unemployed for 6 months, your annual income might be $40,000-$50,000, potentially qualifying you for significant subsidies.

❌ Don't Overestimate Your Income

When applying for ACA subsidies, some people overestimate income "to be safe." This can cost you.

Better Approach:

• Make your best realistic estimate
• Update the marketplace if your income changes
• If you underestimate, you'll owe back some subsidy at tax time (but payment plans are available)
• If you overestimate, you're overpaying all year (though you'll get a tax refund)

❌ Don't Forget to Update Your Income

If you find a new job while on ACA marketplace coverage with subsidies, you must report the income change within 30 days.

What Happens:

• Your subsidy will be recalculated
• Your monthly premium will likely increase
• This prevents a large tax bill next year

Making Your Final Decision: A Practical Checklist

Step 1: Calculate All Costs

• [ ] Get COBRA cost from employer notice
• [ ] Get ACA marketplace quotes (with subsidies) at Healthcare.gov
• [ ] Check Medicaid eligibility
• [ ] Get spouse's plan costs (if applicable)
• [ ] Research short-term plan costs (if considering)

Step 2: Assess Your Healthcare Needs

• [ ] List all current doctors and specialists
• [ ] Check which insurance plans they accept
• [ ] List all prescriptions and check formularies
• [ ] Consider upcoming procedures or treatments
• [ ] Think about your typical annual healthcare usage

Step 3: Evaluate Your Financial Situation

• [ ] Review your emergency fund
• [ ] Calculate monthly budget
• [ ] Estimate job search timeline
• [ ] Factor in unemployment benefits and severance
• [ ] Determine maximum affordable monthly premium

Step 4: Compare Coverage Details

• [ ] Deductibles (in-network and out-of-network)
• [ ] Out-of-pocket maximums
• [ ] Provider networks
• [ ] Prescription drug coverage
• [ ] Specialist referral requirements

Step 5: Consider Your Timeline

• [ ] How long until you expect new job with benefits?
• [ ] Are you close to age 65 (Medicare)?
• [ ] Any known medical events coming up?
• [ ] How much time left in the calendar year?

Step 6: Make Your Decision

• [ ] Choose the option that best fits your needs and budget
• [ ] Set calendar reminders for deadlines
• [ ] Gather all necessary documents
• [ ] Complete enrollment
• [ ] Make first payment
• [ ] Confirm coverage is active

Final Thoughts: Most People Save with ACA Marketplace

After helping hundreds of people navigate this decision, here's the pattern: most people save significant money with ACA marketplace plans, especially if they're eligible for subsidies.

COBRA makes sense for specific situations—active treatment, pregnancy, imminent new job—but for the majority of people who've lost their jobs, ACA marketplace coverage provides comprehensive protection at a fraction of COBRA's cost.

Don't let familiarity bias push you toward COBRA. Yes, it's the same coverage you had. Yes, it's easier because nothing changes. But if it costs $1,500/month and an ACA Silver plan with subsidies costs $200/month, you're spending $15,600 more per year for convenience.

Run the numbers. Compare the options. Choose the coverage that protects your health and your finances.

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Quick Decision Guide

Go with ACA Marketplace if:

• Your estimated annual income qualifies for subsidies
• You're flexible on doctors and networks
• You want to minimize monthly costs
• Your job search may take more than 3 months
• You need coverage for more than 18 months

Go with COBRA if:

• You need your specific doctors right now
• You're in the middle of critical treatment
• You expect a new job with benefits within 2-3 months
• You've already met a significant portion of your deductible
• Cost is less important than continuity of care

Go with Medicaid if:

• Your income qualifies (below 138% FPL in expansion states)
• You need free or very low-cost comprehensive coverage
• You live in a Medicaid expansion state

Consider Short-Term Insurance only if:

• You're young, healthy, with no pre-existing conditions
• You need only catastrophic coverage for 1-3 months
• You understand and accept the significant coverage limitations
• You've been denied or priced out of other options

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Related Resources:

• What to Do When Laid Off →
• Emergency Budget Planning →
• Filing for Unemployment →
• COBRA vs ACA Calculator →
• Severance Agreements Guide →