Lost your job-based health insurance? COBRA vs. the Marketplace

Your three main options

When you lose a job, have your hours cut, or lose coverage through a spouse's job, you usually have three main paths to new health insurance. You can keep your old plan through COBRA, buy a plan on the Health Insurance Marketplace, or, if your income is low enough, enroll in Medicaid. The deadlines are short, so it helps to know how each one works before you decide.

COBRA: keeping your old plan

COBRA is a federal law that lets you and your covered family members stay on your employer's group health plan for a limited time after you lose coverage. It generally applies to private employers with 20 or more employees. Many states have their own "mini-COBRA" laws that cover smaller employers.

Events that can qualify you include losing your job for any reason other than gross misconduct, having your hours reduced, divorce or legal separation, the death of the covered employee, and a child aging out of dependent coverage.

• How long: COBRA usually lasts up to 18 months after a job loss or cut in hours. It can be extended to 29 months if someone in the family is disabled, or up to 36 months if a second qualifying event happens during the first 18 months.
• Cost: You can be charged up to 102% of the plan's full cost. That's the share your employer used to pay, plus your share, plus a 2% administrative fee. During a disability extension, the plan can charge up to 150%.
• Deciding: After your plan sends you a COBRA election notice, you have at least 60 days to decide whether to enroll.
• Paying: You have at least 45 days after you elect COBRA to make your first payment, and a 30-day grace period for each monthly payment after that.

COBRA's advantages and drawbacks

COBRA's big advantage is continuity. You keep the same doctors, the same drug list, and the same plan. Any amount you've already paid toward this year's deductible and out-of-pocket maximum usually still counts. That can matter a lot if you're in the middle of treatment or have already met your deductible.

The drawback is price. Employers usually pay a large share of the premium, and with COBRA you pay all of it. You also can't get Marketplace premium tax credits while you're enrolled in COBRA.

COBRA can also be retroactive. If you elect it within the deadline, coverage may reach back to the day your job coverage ended, depending on the plan's rules. Some people wait to elect it unless they need care, but missing a deadline or a payment can leave you with no coverage at all.

The Marketplace: a 60-day Special Enrollment Period

Losing job-based coverage qualifies you for a Special Enrollment Period on HealthCare.gov or your state's Marketplace. You have 60 days after your coverage ends to pick a plan. You can also apply up to 60 days before it ends if you know the date, so there's no gap.

If your coverage has already ended, a Marketplace plan generally starts the first of the month after you pick it. Your plan only takes effect once you pay the first premium to the insurer. Keep any letter or notice showing when your job coverage ends, since you may be asked to prove it.

Depending on your expected income for the year, you may qualify for a premium tax credit that lowers your monthly payment. Being offered COBRA does not stop you from getting a tax credit, as long as you don't enroll in COBRA. Keep in mind that the larger tax credits available from 2021 through 2025 expired, so people with income above 400% of the federal poverty level generally get no tax credit.

Medicaid if your income drops

Medicaid looks at your current income, not just last year's earnings. If losing your job drops your income enough, you may qualify, depending on your state's rules. You can apply for Medicaid at any time of year. If you qualify, coverage can start right away.

Starting in 2027, many adults who get Medicaid through the Affordable Care Act expansion will need to meet new work or community engagement requirements unless they are exempt. People who are looking for work should ask their state Medicaid agency how the rules apply to them.

How to compare the cost

Ask your former employer or the plan's COBRA administrator for the exact monthly COBRA premium. Then get Marketplace quotes for the rest of the year using a realistic income estimate. Compare the full picture:

• Monthly premium after any tax credit.
• Deductible and out-of-pocket maximum, keeping in mind that a new plan starts your deductible over.
• Whether your doctors, hospitals and prescriptions are covered.
• How long you expect to need coverage before a new job's plan begins.

Common mistakes to avoid

Timing rules trip up a lot of people. These are some of the most common errors:

• Missing the 60-day Marketplace window. If you let it pass, you may have to wait until the next Open Enrollment, which runs from November 1 to January 15 on HealthCare.gov.
• Dropping COBRA midyear to switch. If you voluntarily stop COBRA outside Open Enrollment, that generally does not open a new Special Enrollment Period. You can switch if COBRA runs out, if your former employer stops paying part of it, or during Open Enrollment.
• Ending COBRA before new coverage is confirmed. If you're moving to Medicaid or a Marketplace plan, wait for a final decision and a confirmed start date first.
• Guessing your income. With repayment caps on extra tax credits removed starting with the 2026 tax year, a low income estimate can mean a large tax bill. Update your Marketplace application if your income changes, such as when you start a new job.

Where to get free help

For COBRA questions or problems with an employer's plan, contact the U.S. Department of Labor's Employee Benefits Security Administration at askebsa.dol.gov or 1-866-444-3272. For Marketplace plans, call 1-800-318-2596 or find a free local Navigator at localhelp.healthcare.gov. For Medicaid, contact your state Medicaid agency. Your state insurance department can tell you about any mini-COBRA law.