COBRA vs ACA Calculator

COBRA vs ACA: What You Need to Know

Losing your employer health insurance is stressful, but you have options. Understanding the differences between COBRA and ACA marketplace plans can save you thousands of dollars.

What is COBRA?

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue your employer's group health plan for up to 18 months after job loss. Key facts:

• Same coverage: You keep exactly the same plan, doctors, and network
• Full cost: You pay 102% of the total premium (your share + employer's share + 2% admin fee)
• Retroactive: You can wait up to 60 days to enroll and backdate if needed
• Eligibility: Companies with 20+ employees must offer COBRA

What is the ACA Marketplace?

The Affordable Care Act marketplace (healthcare.gov) offers individual and family health plans with income-based subsidies:

• Subsidies available: Reduce monthly premiums based on income
• Various plans: Bronze, Silver, Gold, Platinum tiers with different cost-sharing
• Special enrollment: Job loss triggers a 60-day special enrollment period
• All pre-existing conditions covered: No exclusions or higher premiums for health issues

When COBRA Makes Sense

• Already met your deductible: If you've paid thousands toward your deductible this year, starting over on a new plan costs more
• In the middle of treatment: Continuity of care with the same doctors and network
• High income: If you don't qualify for ACA subsidies, COBRA may not be much more expensive
• Short gap: If you're starting a new job with benefits soon, COBRA bridges the gap
• HSA contributions: If you have an HSA-eligible plan and want to keep contributing

When ACA Makes Sense

• Income qualifies for subsidies: Subsidies can reduce ACA costs to $0-100/month
• Haven't met deductible: Starting fresh on a new plan costs the same
• COBRA is expensive: COBRA often costs $600-2,000+/month for families
• Medicaid eligible: If your income is low enough, Medicaid may be free
• Want better coverage: You can choose a plan with lower out-of-pocket costs

Important Deadlines

Don't miss these critical dates:

• COBRA election: 60 days from losing coverage to elect COBRA
• COBRA payment: 45 days after election to make first payment
• ACA special enrollment: 60 days from losing coverage to enroll

The COBRA "Wait and See" Strategy

Because COBRA is retroactive, some people wait to elect it:

1. Don't elect COBRA immediately
2. If you stay healthy, enroll in ACA and don't use COBRA
3. If you have a major medical expense, retroactively elect COBRA within 60 days

Caution: This is risky. If you miss the 60-day window, you lose COBRA forever.

Medicaid: The Free Option

If your income drops low enough (typically under 138% of the federal poverty level in expansion states), you may qualify for Medicaid:

• Free or very low-cost coverage
• No deductibles or copays in many states
• Can apply any time (no enrollment period)

What About Short-Term Health Insurance?

Short-term plans are NOT recommended for most people:

• Don't cover pre-existing conditions
• Limited benefits and high out-of-pocket costs
• Can deny claims more easily
• Don't count as minimum essential coverage