Lost Your Job: Should You Choose COBRA or a Marketplace Plan?
Learning goal: Compare COBRA continuation coverage with a Marketplace plan after losing a job, and know the 60-day deadline and the trap in dropping COBRA early.
Short answer
COBRA lets you keep your former employer's health plan for a limited time, but you generally pay the whole premium, up to 102% of the plan's cost. A Marketplace plan may cost less, especially if you qualify for savings. You can enroll in a Marketplace plan within 60 days of losing job-based coverage. Compare both before deciding.
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The Fuller Picture
COBRA keeps your doctors, network and deductible progress, which can matter mid-treatment. A Marketplace plan means a new network and deductible, but savings are based on your income, not employment. The trap: if you choose COBRA and later drop it voluntarily, you generally can't switch to the Marketplace until the next Open Enrollment.
Key Takeaways
- The Department of Labor: "Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan."
- COBRA generally applies to employers with 20 or more employees; some states have their own continuation laws for smaller employers.
- HealthCare.gov: "You can enroll in a Marketplace plan within 60 days of losing your job-based coverage."
- Voluntarily dropping COBRA doesn't open a Special Enrollment Period.
- When COBRA runs out, you have 60 days to enroll in a Marketplace plan.
Real-World Example
Dana
Dana is laid off in March, midway through physical therapy. COBRA would cost her $700 a month for the same plan. A Marketplace Silver plan, with a tax credit based on her lower income, would cost $180, but her therapist isn't in its network and the deductible would restart. She compares both within 60 days and picks the Marketplace plan, after finding an in-network therapist.
Common Mistakes
- Missing the 60-day Marketplace window while deciding.
- Choosing COBRA, then dropping it, and being stuck until Open Enrollment.
- Not checking Marketplace savings based on lower income.
- Forgetting that a new plan's deductible starts over.
Interactive Exercise
Compare COBRA With a Marketplace Plan
Enter the monthly cost of each option you're offered.
Arithmetic only, on the numbers you enter. Nothing is estimated.
Knowledge Check
Question: You chose COBRA after losing your job, then decide three months later to cancel it to save money. Can you join a Marketplace plan right away?
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Related Insurance Terms
Related Scenarios
Questions to explore next
Questions readers often ask next about this topic:
- Is COBRA or a Marketplace plan cheaper for me?
- Will my doctors be in network on a Marketplace plan?
- How long can I stay on COBRA?
- Does my state have its own continuation law?
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- dol.govContinuation of Health Coverage (COBRA) · U.S. Department of Labor
- healthcare.govCOBRA coverage when you're unemployed · HealthCare.gov (U.S. Centers for Medicare & Medicaid Services)
Educational information, not advice: This lesson is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers. COBRA's cost rule and employer size are from the U.S. Department of Labor; the Marketplace rules from HealthCare.gov. COBRA terms vary by plan and qualifying event. Educational information.