COBRA vs. ACA Marketplace: Which Should You Take When Leaving a Job?

Overview

Losing job-based health insurance can feel overwhelming, especially when you’re suddenly faced with new choices. Two of the most common options are COBRA continuation coverage and ACA Marketplace insurance. Both paths help you stay covered, but they differ in cost, flexibility, and long-term value.

In this guide, we’ll break down the differences between COBRA and Marketplace plans, explain their pros and cons, and help you understand which option might fit your situation best.

What Is COBRA and the ACA Marketplace?

COBRA Insurance

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to keep your employer-sponsored health insurance for up to 18–36 months after leaving your job. You get the same coverage, but you now pay the full premium—both your share and the employer’s contribution—plus a small administrative fee.

• Best for: Short-term coverage if you need stability with your current providers and medications.

• Drawback: COBRA is usually much more expensive than what you paid while employed.

learn more about COBRA from the Department of Labor.

ACA Marketplace Insurance

The Affordable Care Act (ACA) Marketplace, often called the Health Insurance Exchange, offers health plans sold through Healthcare.gov or state exchanges. You can shop for new coverage, compare plans, and often qualify for tax credits or subsidies that lower your monthly cost.

Check Eligibility: Use our ACA subsidy calculator to estimate your subsidy eligibility based on your income and household size.

• Best for: Affordable long-term coverage, especially if your income qualifies for subsidies.

• Drawback: May require switching doctors or navigating new plan rules.

COBRA vs. Marketplace: Key Differences

1. Cost

• COBRA: Typically very expensive—you cover the full premium, which can run hundreds or even over $1,000 per month.

• Marketplace: Costs vary but are often lower, especially if you qualify for subsidies based on income.

Example: If your employer covered 70% of your $600 monthly premium, you only paid $180. Under COBRA, you’d now pay the full $600 plus fees. Marketplace subsidies could bring a plan closer to—or even below—your old $180 cost.

2. Coverage & Providers

• COBRA: You keep your exact plan, with the same doctors, hospitals, and prescription coverage.

• Marketplace: You’ll need to choose a new plan. Some doctors may not be in-network, so double-check before enrolling.

3. Length of Coverage

• COBRA: Limited to 18–36 months depending on your circumstances.

• Marketplace: Renewable coverage as long as you pay your premium.

4. Flexibility

• COBRA: No chance to change your coverage until the next employer open enrollment.

• Marketplace: Multiple plan options with different price points and coverage levels.

5. Eligibility & Enrollment

• COBRA: You must elect COBRA within 60 days of losing job coverage.

• Marketplace: Job loss qualifies you for a Special Enrollment Period—usually 60 days to sign up outside of Open Enrollment.

Common Questions About COBRA vs. Marketplace

Q: Can I switch from COBRA to a Marketplace plan later?
Yes, but only during Open Enrollment or if you have another qualifying life event (like exhausting COBRA or moving).

Q: What if I have ongoing treatments?
If you’re in the middle of major care (like surgery or cancer treatment), COBRA may be the smoother option since you won’t need to switch providers mid-treatment.

Q: Do subsidies apply to COBRA?
No. Federal subsidies apply only to ACA Marketplace plans.

How to Decide: Action Steps

1. Compare Costs:

   • Ask your employer for the full monthly COBRA premium.

   • Use our calculator to estimate Marketplace costs with subsidies.

2. Check Provider Networks:

   • Do you need to keep your exact doctors? If so, COBRA may be worth the cost.

   • If you’re flexible, Marketplace plans often save money.

3. Consider Your Timeline:

   • Need a short-term bridge until new job coverage? COBRA might be simpler.

   • Need long-term, affordable insurance? Marketplace is often better.

4. Look at Family Needs:

   • Marketplace plans may cover dependents at lower costs, especially with subsidies.

Bottom Line

Choosing between COBRA and Marketplace insurance depends on your health needs, budget, and future plans.

• COBRA provides continuity but at a high price.

• Marketplace coverage offers affordability and long-term flexibility, especially with subsidies.

You’re not alone in this decision—it’s a crossroads many face after leaving a job. Take time to compare both options, run the numbers, and pick the plan that gives you peace of mind without breaking the bank.