COBRA vs. Marketplace Insurance: What’s Better After Leaving a Job?
COBRA vs. Marketplace Insurance: What’s Better After Leaving a Job?
Losing employer-sponsored health coverage can be a stressful experience, especially when it happens unexpectedly. Fortunately, individuals have two primary options for maintaining or replacing their coverage: COBRA continuation coverage or enrolling in a plan through the Health Insurance Marketplace. Understanding the differences between these two options can help you make the most cost-effective and practical decision for your situation.
How COBRA Works
COBRA (Consolidated Omnibus Budget Reconciliation Act) allows eligible employees and their dependents to continue their existing health insurance coverage after leaving a job. This includes voluntary resignation, termination (except for gross misconduct), or reduction in work hours. With COBRA, you keep the same plan, network, and benefits you had through your employer. However, you are now responsible for the entire premium, including the portion your employer used to pay—plus a possible 2% administrative fee. This often results in a significant increase in monthly costs.
ACA Marketplace Plans
Marketplace insurance, established under the Affordable Care Act (ACA), provides individuals with access to a range of private health plans, often with subsidies based on household income. These plans are available during Open Enrollment or a Special Enrollment Period triggered by a Qualifying Life Event—such as losing job-based coverage.
Unlike COBRA, Marketplace plans give you the opportunity to choose a new provider network, deductible level, or premium range. If you qualify for tax credits, the cost may be substantially lower than paying full COBRA premiums.
Cost Comparisons and Deadlines
The cost of COBRA can be 3–4 times higher than a subsidized Marketplace plan. For example, if your employer previously paid 70% of a \$600/month premium, your COBRA cost could jump to \$612/month or more (100% + 2% admin fee), compared to a \$100–\$300/month Marketplace plan with subsidies.
Key deadlines to note:
COBRA: You have 60 days from the loss of coverage to elect continuation.
Marketplace: A Special Enrollment Period gives you 60 days before or after the loss of coverage to enroll.
When to Choose the Marketplace
Choosing a Marketplace plan may be a smarter move if:
* You’re eligible for subsidies.
* You want more plan flexibility.
* You expect to need lower monthly premiums.
* You anticipate being uninsured for an extended time.
Recently left a job? Let us compare COBRA and Marketplace plans for you and help you find the coverage that fits your needs and budget.