Losing health insurance when you leave a job can feel overwhelming. Suddenly, you’re faced with a choice between keeping your old plan through COBRA or moving to a new one through the Affordable Care Act (ACA) Marketplace. Both paths provide coverage, but the costs, flexibility, and long-term benefits are very different. Understanding these differences will help you make the best decision for your situation.
What Is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) gives you the option to continue your former employer’s health plan for a limited time—usually 18 months, though it can extend to 36 months in some situations. You’ll keep the exact same coverage, which means the same doctors, hospitals, and prescription benefits.
The catch is cost. Under COBRA, you’re responsible for the entire premium—your portion plus the amount your employer previously paid—along with a small administrative fee. For many, this makes COBRA significantly more expensive than what they paid while employed.
Best for: People who need uninterrupted care, especially if they’re in the middle of treatments or want to avoid changing providers.
Drawback: High premiums compared to other options.
What Is the ACA Marketplace?
The ACA Marketplace is a federal and state-run platform where you can shop for individual or family health insurance. Plans are divided into categories based on coverage levels and costs. The biggest advantage is affordability: most applicants qualify for subsidies or tax credits that reduce monthly premiums.
With Marketplace insurance, you’ll likely choose a new plan with different networks and rules, which may mean switching doctors. But the savings can be substantial, especially if your income qualifies for significant subsidies.
Best for: Affordable long-term coverage with flexibility in plan options.
Drawback: You may need to change providers or adjust to a new plan structure.
Key Differences Between COBRA and the Marketplace
1. Cost
- COBRA: Very costly—you pay the full premium plus fees.
- Marketplace: Typically much cheaper, especially with subsidies that lower monthly costs.
2. Coverage and Networks
- COBRA: No change—you keep your exact plan and providers.
- Marketplace: You’ll need to pick a new plan, so check that your doctors are in-network.
3. Length of Coverage
- COBRA: Time-limited (18–36 months).
- Marketplace: Ongoing coverage as long as you pay premiums.
4. Flexibility
- COBRA: Locked into your current plan until the next employer open enrollment.
- Marketplace: Multiple plan options at different price points and benefit levels.
5. Enrollment Rules
- COBRA: You have 60 days from losing your job to sign up.
- Marketplace: Job loss gives you a 60-day Special Enrollment Period outside the usual open enrollment window.
Common Questions
Can I switch from COBRA to a Marketplace plan later?
Yes, but only during Open Enrollment or another qualifying event (like exhausting COBRA or moving).
What if I’m in the middle of medical treatment?
COBRA may be the better choice since you won’t need to switch doctors mid-care.
Are subsidies available for COBRA?
No. Subsidies apply only to ACA Marketplace plans.
How to Decide
- Compare Costs: Request the full COBRA premium from your employer, then compare it to Marketplace estimates with subsidies.
- Check Networks: If keeping your doctors is essential, COBRA may be worth the price. If not, Marketplace plans usually save money.
- Consider Your Timeline: For short-term coverage until new benefits begin, COBRA may be simpler. For long-term affordability, Marketplace is usually the smarter choice.
- Look at Family Needs: Marketplace plans often reduce costs for dependents, especially with subsidies factored in.
Bottom Line
Both COBRA and ACA Marketplace plans keep you insured, but they serve different needs. COBRA offers stability with your current doctors and benefits, but at a steep cost. The Marketplace provides more affordable, flexible options, particularly if you qualify for subsidies.
Ultimately, the right choice depends on your budget, healthcare needs, and future plans. Take the time to compare both options so you can choose coverage that offers peace of mind without draining your finances.
