COBRA vs. Marketplace: A Complete Cost Comparison

How COBRA works

COBRA (the Consolidated Omnibus Budget Reconciliation Act) requires employers with 20 or more employees to offer continuation coverage when you lose your job, have your hours reduced, or experience certain other qualifying events. Many states have "mini-COBRA" laws that extend similar protections to smaller employers.

Under COBRA, you keep the exact same plan you had as an employee: same network, same formulary, same benefits. The difference is the price. As an employee, your employer typically paid 70% to 84% of the premium. On COBRA, you pay the entire premium yourself, plus a 2% administrative fee. That means you pay 102% of the full plan cost.

The average COBRA premium for individual coverage in 2026 runs $600 to $800 per month. For family coverage, it often exceeds $1,800 per month. Over a full year, that is $7,200 to $9,600 for an individual and over $21,600 for a family.

Duration limits

COBRA coverage lasts up to 18 months for most qualifying events (like job loss or reduced hours). Certain events qualify for 36 months: divorce or legal separation, a dependent child aging out, the death of the covered employee, or the employee becoming eligible for Medicare.

You cannot extend COBRA beyond these limits. Once COBRA runs out, you can enroll in a marketplace plan through a Special Enrollment Period triggered by the loss of COBRA coverage.

How marketplace plans compare

ACA marketplace plans are available through HealthCare.gov or your state exchange. When you lose job-based coverage (including COBRA), you qualify for a 60-day Special Enrollment Period to sign up.

The key advantage of the marketplace is subsidies. If your projected annual income falls within the eligible range (generally 100% to 400% of the federal poverty level in 2026, with the return of the subsidy cliff), you receive a premium tax credit that directly reduces your monthly cost. If your income is below 250% FPL and you choose a Silver plan, you also get cost-sharing reductions that lower deductibles and copays.

The national average benchmark Silver plan premium for a 40-year-old is about $625 per month in 2026 before subsidies. After subsidies, many enrollees pay $50 to $200 per month depending on income and location.

The cost math: side by side

For most people who just lost a job, the marketplace is significantly cheaper. The calculator below lets you plug in your COBRA premium and income to see an estimate.

Still not sure which way to go? Nora can pull up actual marketplace plans in your ZIP code so you can compare them side-by-side with your COBRA quote.

Compare real plans

Consider a 40-year-old who earned $65,000 at their last job but projects $45,000 in annual income for 2026 (due to a period of unemployment). Their COBRA premium is $680/month. Based on their projected income, they might qualify for a marketplace subsidy of $300 to $400/month, bringing their marketplace premium down to $200 to $350/month. That is roughly $4,000 to $5,700 per year in savings compared to COBRA.

One important detail for anyone who was recently laid off: your marketplace subsidy is based on your projected annual income for the current year, not your previous salary. If you expect to earn less in 2026 because of unemployment, your subsidy will be based on that lower number. This often makes the marketplace an even better deal than people expect.

When COBRA wins

Despite the cost difference, there are specific situations where COBRA is the right choice:

You are in the middle of treatment

If you are undergoing chemotherapy, recovering from surgery, managing a complex condition, or in the middle of a treatment plan with a specific provider, switching plans mid-stream creates real risk. Your current doctors may not be in any marketplace plan's network. Prior authorizations and referrals do not transfer. Continuity of care has clinical value that is hard to put a dollar figure on.

You have already met your deductible

If you lost your job in September and have already spent $5,000 toward your employer plan's deductible, switching to a new marketplace plan resets that counter to zero. For the remaining months of the year, COBRA means you keep all the progress toward your deductible and out-of-pocket maximum. If you expect significant medical costs for the rest of the year, paying a few months of COBRA premiums might be cheaper than starting over with a new deductible.

You need a specific provider or drug

Marketplace plan networks vary widely, and your current specialist or preferred hospital may not be covered. If staying with a particular provider is important (for example, a specialist you have been seeing for years or a drug that requires step therapy under a new plan), COBRA lets you maintain that access.

Your income is too high for subsidies

With the enhanced subsidies expiring and the subsidy cliff returning in 2026, households earning above 400% FPL no longer receive premium assistance. If your projected income is $60,000+ for a single person or $125,000+ for a family of four, marketplace plans at full price may not be much cheaper than COBRA, and COBRA could offer better benefits.

When the marketplace wins

For almost everyone else, the marketplace is the better deal. Specific advantages:

• Substantially lower monthly cost after subsidies. The premium difference can be $300 to $500/month or more.
• Cost-sharing reductions on Silver plans for those with income below 250% FPL. These reduce deductibles and copays in ways that COBRA cannot match.
• Full-year coverage. COBRA is temporary (18 months max). A marketplace plan renews annually with no gap.
• No employer dependency. If your former employer changes or drops their plan, your COBRA coverage changes too. A marketplace plan is yours regardless of what your old employer does.

The retroactive COBRA strategy

This is a timing technique that can save you money while keeping a safety net. It works like this:

After losing coverage, you have 60 days to elect COBRA. During that 60 days, you are not paying anything. If you elect COBRA, coverage is retroactive to the date your employer coverage ended. After electing, you then have an additional 45 days to make your first premium payment, which must cover all months back to your termination date.

The strategy: wait during the 60-day COBRA election window. If nothing happens medically, let the window close and enroll in a marketplace plan instead (you also have a 60-day SEP from losing job-based coverage). But if you have a medical emergency or unexpected health expense during those 60 days, elect COBRA retroactively to cover those costs under your old plan.

This gives you up to 60 days of de facto free insurance. If you do not need care, you pay nothing and move on to a marketplace plan. If you do need care, you elect COBRA and pay the premiums retroactively.

There are important caveats:

• If you elect COBRA retroactively, you owe premiums for every month back to the coverage end date, not just the month you needed care.
• This is not "free" insurance. It is a calculated gamble that you won't need care during the gap. If you do, you pay for the full retroactive period.
• You cannot use both COBRA and the marketplace simultaneously. If you elect COBRA, it may complicate your marketplace enrollment timing. Be careful not to let your marketplace SEP expire while you wait.
• Providers may ask for proof of insurance at the time of service. If you have not yet elected COBRA, you may need to pay upfront and seek reimbursement later.

Election timing strategy

The ideal approach for most people who lost a job:

1. Get your COBRA election notice. Note the monthly premium and the 60-day election deadline.
2. Estimate your income for the year (including severance, unemployment benefits, and any expected earnings). This is what determines your marketplace subsidy.
3. Check marketplace plans. Ask Nora to compare plans based on your projected income, or go directly to HealthCare.gov (or your state exchange). Pay attention to provider networks if you have doctors you want to keep.
4. Compare total annual costs for COBRA vs. the best marketplace option. Include premiums, expected deductible spending, and copays for the care you anticipate using.
5. If the marketplace is clearly cheaper, enroll in a marketplace plan within your 60-day SEP. Use the retroactive COBRA strategy as a safety net during the gap if you want.
6. If COBRA makes sense short-term (mid-treatment, deductible met), consider electing COBRA for a few months and then switching to the marketplace. Note that voluntarily dropping COBRA does not create a new SEP, so you need to use the SEP from your original job loss. Plan accordingly.

Key dates and deadlines

• 60 days to elect COBRA after receiving your election notice.
• 45 days to make your first COBRA payment after electing.
• 60 days from your last day of employer coverage to enroll in a marketplace plan via SEP.
• 18 months maximum COBRA duration for job loss (36 months for certain other events).
• Marketplace coverage start date depends on when you enroll. If you sign up before the 15th of the month, coverage typically begins the 1st of the following month.

These deadlines overlap, which gives you flexibility but also creates the risk of missing one if you are not paying attention. Mark them on your calendar.

Summary

For the majority of people who lost employer coverage, the marketplace with subsidies costs significantly less than COBRA. The exceptions are real but narrow: active treatment with a specific provider, a deductible you have already met, or income too high for subsidies.

If you are unsure, start by checking your marketplace options. The application is free, and you are not committed to anything by looking. Once you see what you would actually pay after subsidies, the comparison with COBRA becomes straightforward.