COBRA vs Marketplace Health Insurance: Cost Comparison Guide
COBRA continuation coverage costs the full premium your employer was paying ($600-900/month typical) plus 2% admin fee, lasts 18 months, and lets you keep current doctors. Marketplace plans often cost $300-500 less monthly with subsidies, require new provider networks, but offer comparable coverage. Choose COBRA if you're mid-treatment or have critical doctor relationships; choose marketplace if you qualify for subsidies and can switch networks. You have 60 days to decide, and COBRA can be elected retroactively.
📍 Location Note: COBRA is a US-specific health insurance continuation program. This article explains the US system for educational purposes. If you're outside the US, consult local insurance advisors about continuation options in your country. The core principle applies globally: employer-provided health insurance typically ends when you leave, requiring alternative coverage.
When my friend Lisa got laid off last March, she wasn't thinking about health insurance. She was thinking about updating her resume, reaching out to her network, maybe finally taking that trip to see her sister. Then the HR packet arrived in the mail.
COBRA continuation coverage: $687 per month. Due in 45 days.
She called me in a panic. "I thought my employer covered my health insurance. How is it almost $700 a month now? And what even is COBRA?"
If you're reading this, you're probably in a similar situation. You've just lost your job, or you're about to quit, and you're staring at health insurance options that make no sense. The acronyms are confusing. The costs are shocking. And you need to make a decision fast.
Let me walk you through it. We'll compare COBRA and private marketplace plans, break down the real costs, and help you figure out which option actually makes sense for your situation.
What is COBRA? (And Why It Costs So Much)
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. I know—thrilling name. What it actually means: you can keep your employer's health insurance plan for a limited time after you leave your job.
Here's the catch: you now pay the full premium. When you were employed, your employer probably covered 70-80% of your health insurance cost. You saw a small deduction from your paycheck—maybe $150-$250 per month—and thought "that's what health insurance costs."
It wasn't. The real cost of your plan was probably $600-$900 per month (or more if you have family coverage). Your employer was just paying the majority of it. Now you pay all of it, plus a 2% administrative fee.
Real Example: The COBRA Shock
While employed: You paid $180/month (what you saw deducted from paycheck)
Your employer paid: $520/month (what you didn't see)
Total plan cost: $700/month
COBRA cost: $714/month ($700 + 2% admin fee)
How Long Does COBRA Last?
Standard coverage: 18 months from your last day of employment
Extended coverage: Up to 36 months if you qualify for a disability extension (rare and complicated—don't count on it)
That 18-month window matters because you're making a short-term decision. This isn't permanent insurance. It's a bridge.
The COBRA Timeline (Don't Miss These Dates)
| Timeline | What Happens |
|---|---|
| Within 14 days | Employer must notify COBRA administrator of your job loss |
| Within 44 days | You receive COBRA election notice in the mail |
| 60 days | Your deadline to elect COBRA coverage |
| 45 days after election | First premium payment due (includes retroactive coverage) |
| 18 months | COBRA coverage ends (in most cases) |
Important: You have 60 days to elect COBRA, but you can wait and decide retroactively. This is huge. If you get in a car accident on day 45 and haven't elected COBRA yet, you can elect it and have coverage backdated to your last day of employment.
This retroactive feature is why some people delay their COBRA decision—they're essentially gambling that they won't need expensive medical care in those first 60 days.
Warning: If you're taking prescription medications, have upcoming procedures, or have chronic conditions, don't gamble. Elect COBRA immediately. A gap in coverage could mean starting over with deductibles and losing access to your current doctors.
Quick Tool: COBRA vs. Marketplace Cost Comparison
Compare your real costs to see which option saves you money. This accounts for premiums, deductibles, and potential subsidies.
💵 All amounts in USD
Your COBRA Details
Marketplace Plan Details
Check Healthcare.gov calculator for your subsidy
COBRA Total Cost
Marketplace Total Cost
💡 Recommendation
Note: This calculator assumes you'll meet your full deductible. Actual costs depend on your healthcare usage. Consider doctor networks and prescription coverage when deciding.
Private Marketplace Plans (The Alternative to COBRA)
Private health insurance—also called marketplace plans or ACA plans (Affordable Care Act)—are the policies you buy directly from insurance companies through Healthcare.gov or your state's health exchange.
Unlike COBRA, where you're keeping your old employer's plan, marketplace plans are brand new policies. Different networks, different coverage rules, different costs.
How Subsidies Work (This Is Where the Savings Come From)
If you lost your job and your income dropped, you likely qualify for premium tax credits—subsidies that reduce your monthly health insurance cost. These subsidies are the main reason marketplace plans can be significantly cheaper than COBRA.
The subsidy amount depends on your estimated annual income for the year. If you're unemployed for 6 months, you estimate based on:
- Any unemployment benefits you'll receive
- Part-time or freelance income
- Income from a new job when you find one
Lower income = higher subsidy. If your annual income for 2026 is projected to be $30,000 (versus $70,000 when employed), you could receive $300-500/month in premium tax credits.
Marketplace Plan Types
| Plan Type | Typical Premium | Deductible Range | Best For |
|---|---|---|---|
| Bronze | Lowest | $6,000-$8,500 | Healthy, young, minimal care needed |
| Silver | Moderate | $3,500-$5,000 | Most people (best subsidy value) |
| Gold | Higher | $1,500-$3,000 | Regular medical care, prescriptions |
| Platinum | Highest | $0-$1,000 | Chronic conditions, high healthcare use |
Pro tip: Silver plans often offer the best value because they're where Cost-Sharing Reductions (CSRs) apply if your income is low enough. These reduce your out-of-pocket costs even further.
The Decision Framework: Which One Should You Choose?
Here's how to actually decide between COBRA and marketplace plans. It's not just about cost—though cost is a big factor.
The Simple Decision Rule
Choose COBRA if:
- You have ongoing medical treatment you can't interrupt
- Your doctors won't take any marketplace plans in your area
- You're mid-treatment (surgery scheduled, cancer treatment, pregnancy, etc.)
- The cost difference isn't significant after subsidies
Choose Marketplace if:
- You qualify for subsidies and the savings are substantial
- Your doctors accept marketplace plans
- You're healthy and just need catastrophic coverage
- You're unemployed long-term and need to stretch your savings
What to Do Right Now: Your First 48 Hours
You just lost your job or you're about to leave. Here's your immediate action plan for health insurance.
Hour 1-2: Gather Information
- Get your COBRA election notice (or ask HR when it's coming)
- Note your last day of coverage and the COBRA deadline date
- Download or print your current insurance card (you'll need the plan details)
- Make a list of your current doctors and prescriptions
Day 1: Check for Immediate Coverage Options
- If married: Call your spouse's HR to ask about adding you to their plan
- If under 26: Check if you can get back on your parents' plan
- Note the deadline for these options (usually 30-60 days)
Day 2-7: Shop and Compare
- Go to Healthcare.gov and get marketplace quotes
- Estimate your annual income realistically
- Compare Silver and Gold plans (Bronze if you're very healthy)
- Note the monthly premium with subsidies
Week 2: Verify Networks
- For each plan you're considering, search the provider directory
- Call your doctors' offices and ask: "Do you accept [Plan Name]?"
- Check prescription formularies for your medications
- If something's unclear, call the insurance company directly
Week 3-4: Make Your Decision
- Run the decision matrix from above
- If choosing marketplace: Enroll online (takes 30-60 minutes)
- If choosing COBRA: Complete the election form and mail it back
- Set a calendar reminder for your first premium payment
Don't Panic If You Miss the Deadline
If you're healthy and you accidentally let the 60-day window pass, you'll have to wait until the next open enrollment period (November-January) to get coverage.
This is risky but survivable. Some people do short-term health plans as a bridge (these don't cover pre-existing conditions and have limited benefits, but they're better than nothing). Just don't make a habit of gambling without coverage.
Final Thoughts: You Don't Have to Figure This Out Alone
Health insurance after job loss is confusing by design. The system assumes you'll just stick with COBRA because it's the path of least resistance. But COBRA is expensive, and for most people, there's a better option.
Take the time to shop marketplace plans. Check if you qualify for subsidies. Verify your doctors are in-network. Run the numbers. You might find a plan that costs $300-$500 less per month than COBRA with similar coverage.
And if you're overwhelmed, that's normal. Call Healthcare.gov (1-800-318-2596) and talk to a navigator. They're trained to walk you through this and they don't charge anything. Or ask HR at your old job—they've seen this before and can explain your COBRA options.
The worst thing you can do is nothing. Don't let the 60-day deadline pass because you're stressed and avoiding it. Pick something, even if it's not perfect. You can always switch during the next open enrollment if you find a better option later.
You're dealing with enough right now. At least let health insurance be one less thing to panic about.
Sources & References
- U.S. Department of Labor - COBRA Continuation Coverage
- Healthcare.gov - Health Insurance Marketplace
Sources accessed and verified January 2026.