COBRA or a Marketplace plan? How to compare them properly

When employment ends, a COBRA election notice arrives and it feels like the default. It is not the only option, and for many households it is not the cheaper one. You usually have 60 days to decide, and the comparison takes about twenty minutes.

What COBRA actually costs

COBRA lets you continue your employer plan after coverage would otherwise end. The plan does not change — same network, same deductible, same everything.

What changes is the price. While employed, your employer typically paid a large share of the premium. Under COBRA you pay the entire premium plus a 2% administrative fee. A plan that cost you $180 a month can become $700 or more for the same coverage, and it is the same coverage — that is the shock in the envelope.

What a Marketplace plan costs by comparison

Losing job-based coverage opens a Special Enrollment Period, so you can buy a Marketplace plan outside Open Enrollment. And because your income for the year is now likely lower than it was, you may qualify for a larger advance premium tax credit than you would have expected.

That is the crux of it. COBRA gets no subsidy. A Marketplace plan can. For a household whose income has just dropped, the subsidised Marketplace premium is frequently a fraction of the COBRA premium.

The comparison, side by side

When COBRA is genuinely the better answer

It is not always about price. COBRA wins clearly in a few situations:

• You are mid-treatment with a specialist or a care team you cannot change without real disruption
• You have already paid down a significant portion of your deductible or out-of-pocket maximum this year
• A surgery or procedure is already scheduled and approved under the current plan
• Your household income for the year will still be high enough that little or no subsidy is available
• The gap is short — a new employer plan starts in a few weeks and you want zero disruption

The deadline trap that catches people

You generally have 60 days to elect COBRA, and it can be applied retroactively to the date your coverage ended. That flexibility is genuinely useful — but it creates a trap.

Your Special Enrollment Period for the Marketplace runs on its own 60-day clock from the loss of coverage. If you spend those weeks thinking about COBRA and then decide against it, the Marketplace window may have closed. And note: once you are enrolled in COBRA, voluntarily dropping it mid-term does not open a new Special Enrollment Period. You would be waiting for Open Enrollment.

So run the comparison in the first week, not the eighth.

How to run the comparison in twenty minutes

• Find the exact monthly COBRA premium on your election notice — the real number, not last year's payroll deduction
• Estimate your household income for the remainder of the calendar year, realistically
• Get a subsidised Marketplace quote for that income and household size in your county
• Check your doctors and prescriptions against the Marketplace plan networks and formularies
• Add in how much of your deductible you have already met this year — it only counts on the COBRA side
• Compare total expected cost for the rest of the year, not just monthly premiums

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The bottom line

COBRA is the familiar option, not automatically the right one. Run both numbers early in your 60 days, factor in deductible progress and continuity of care, and decide deliberately. Sarah will run the comparison with you at no cost — including the cases where COBRA turns out to be the better answer.