COBRA lets you keep your former employer’s health plan for up to 18 months after leaving a job — but you pay the entire premium yourself, including the part your employer used to cover, plus a 2% fee. It’s a valuable bridge to avoid a coverage gap, but a subsidized ACA Marketplace plan is often much cheaper.
Losing job-based health coverage is stressful, and COBRA is the option everyone hears about first. It’s genuinely useful — but often not the cheapest, and knowing the alternatives can save you a lot.
How COBRA works
COBRA (a federal law) lets you continue your exact employer health plan after a qualifying event — usually leaving a job, losing hours, or certain family changes — typically for up to 18 months. Same network, same doctors, same coverage. The catch is the price.
Why it’s expensive
While employed, your employer quietly paid a big chunk of your premium. With COBRA, you pay the full premium — your share plus the employer’s share — plus up to a 2% administrative fee. That can mean a bill several times larger than the payroll deduction you were used to, even though nothing about the coverage changed.
The often-cheaper alternative
Losing job-based coverage opens a Special Enrollment Period on the ACA Marketplace, where you may qualify for income-based subsidies that dramatically cut the premium — something COBRA never offers. For many people, a Marketplace Silver plan costs far less than COBRA for comparable coverage.
Other options worth checking: a spouse’s employer plan (losing coverage lets you join it), or Medicaid if your income now qualifies.
The smart way to use COBRA
COBRA has one underrated feature: you have 60 days to elect it, and it’s retroactive. So you can decline it, shop the Marketplace, and — if you have no coverage and a medical need arises within that window — still elect COBRA to cover it. It’s a safety net you can hold in reserve.
How to decide
- Price the Marketplace first, estimating your new (likely lower) income to see your subsidy.
- Check a spouse’s plan if available.
- Compare total cost and whether you must keep specific doctors — COBRA keeps your exact network; a new plan may not.
- Remember the 60-day retroactive window before you pay a single COBRA premium.
The bottom line
COBRA keeps your exact plan but at full price. It’s a reliable bridge — especially given the retroactive election window — but for most people a subsidized Marketplace plan is cheaper. Compare both before you commit.
Frequently asked questions
Why is COBRA so expensive?
While employed, your employer paid a large share of your premium. With COBRA you pay the full cost — your part plus the employer’s part — plus up to a 2% administrative fee. The coverage is the same; you’re just seeing the true price.
Is COBRA or a Marketplace plan cheaper?
Usually the Marketplace, because losing job coverage triggers a Special Enrollment Period and you may qualify for income-based subsidies that COBRA never offers. Compare both before deciding — but price out the Marketplace first.
How long do I have to elect COBRA?
You generally have 60 days from losing coverage (or from receiving your COBRA notice) to elect it, and coverage is retroactive to the date your job-based plan ended — so you can even wait and elect it only if you need care.
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