COBRA vs Marketplace Insurance After a Job Loss

COBRA lets you keep the same job-based plan, with the same doctors and the deductible you've already paid toward, but you usually pay the whole premium plus 2 percent. A Marketplace plan starts you over with a new network and deductible, but premium tax credits based on your income may lower what you pay. This guide compares the cost drivers, coverage, and deadlines for each. It also covers families, people close to 65, and Texas rules.

Key takeaways

• When you lose job-based coverage, HealthCare.gov describes two main options: a Marketplace plan or COBRA.
• With COBRA you usually pay the full premium, including your employer's old share, plus 2 percent. Marketplace savings depend on your household income for the whole year.
• COBRA keeps your network and the deductible you've already met. A Marketplace plan has its own network and deductible.
• You can pick a Marketplace plan up to 60 days before your job coverage ends and up to 60 days after. After that window, dropping COBRA on purpose does not open a Special Enrollment Period. You'd wait for Open Enrollment unless COBRA runs out, your employer stops paying its share, or another life event qualifies you.
• COBRA does not extend your Medicare Part B sign-up window. If you're eligible for Medicare, talk with your State Health Insurance Assistance Program (SHIP) before you elect COBRA.

What is the difference between COBRA and a Marketplace plan?

COBRA continues the plan you had at work. A Marketplace plan is a new plan you buy through HealthCare.gov.

For an overview of every option after a layoff, including a spouse's plan, see health insurance after losing a job.

Who can get COBRA, and how long does it last?

COBRA generally applies to private employers and employee organizations with 20 or more employees and to most state and local government plans. It does not apply to federal government plans or to plans from churches and certain church-related groups.

Qualified beneficiaries include the employee, a spouse or former spouse, and dependent children who were covered the day before the qualifying event, such as the job loss.

After a job loss or cut in hours, COBRA generally lasts up to 18 months. Two exceptions can make it longer:

• Disability extension: up to 29 months.
• Second qualifying event: up to 36 months.

COBRA keeps the same co-pays, deductibles, and coverage limits. You also keep the right to switch plans during your former employer's open enrollment if active employees can.

Is COBRA or a Marketplace plan cheaper?

It depends on your employer's plan, your income for the year, and how much care you expect to use. Prices change every year, so check current Marketplace prices on HealthCare.gov and ask your former employer's plan sponsor for your exact COBRA cost.

What drives the cost of COBRA

With COBRA, you usually pay the whole premium, including the part your employer used to pay, plus 2 percent. A plan may charge up to 102 percent of the premium. During a disability extension, the plan may charge up to 150 percent if the disabled person continues coverage.

Some employers agree to pay part or all of COBRA as part of a severance package. They aren't required to.

What drives the cost of a Marketplace plan

Marketplace savings are based on estimated income for everyone in your tax household for the full calendar year. Income you earned before the job ended still counts.

For tax years after 2025, the IRS says premium tax credit eligibility generally requires household income from 100 to 400 percent of the federal poverty line. The poverty guidelines change every year, so check HealthCare.gov for the current figures. Our premium tax credit guide explains how the credit is figured.

One limit applies to families. If you're offered coverage through a spouse's job and it counts as "affordable," you won't qualify for premium tax credits on a Marketplace plan, even if you turn the offer down.

Compare total cost, not just the premium

CMS lists these factors for comparing COBRA with Marketplace coverage:

• Continuity of coverage
• Provider networks
• Drug lists (formularies)
• Total cost, including premiums, deductibles, and coinsurance
• Quality of care
• Possible Marketplace savings
• Benefits

For example, a Marketplace premium may look lower than COBRA. But if you've nearly met your COBRA deductible and expect more care this year, a new deductible could change the math. Our guide to bronze, silver, and gold plans explains how Marketplace tiers split costs.

Does your deductible reset if you switch to a Marketplace plan?

Yes. COBRA generally keeps you in the same plan, with the same network and the same deductible. A new Marketplace plan has its own network and deductible, so what you paid toward your old deductible doesn't carry over.

Check doctors and drugs before you choose

The Texas Department of Insurance (TDI) advises checking that your doctors are in a plan's network and your medications are on its drug list. Network types differ a lot, so see how HMO, PPO, and EPO networks differ.

Preexisting conditions don't favor COBRA

Some people assume COBRA is the only safe choice with a health condition. TDI says insurers can't deny coverage or charge more for a preexisting condition when you buy Marketplace coverage. Your health history alone doesn't decide it. Compare doctors, drugs, and total costs.

What are the deadlines for COBRA and the Marketplace?

The Marketplace Special Enrollment Period applies if you leave your job for any reason, even if you quit or are fired. Our Special Enrollment Period guide covers other qualifying events, and the open enrollment dates guide lists the annual windows.

If you miss a COBRA payment past the 30-day grace period, coverage can end and the plan isn't required to reinstate it.

When does each plan start?

A Marketplace plan can't start the same day your job coverage ends. It can start the first day of the month after. HealthCare.gov gives this example: you lose coverage March 7, pick a plan by March 31, and coverage starts April 1.

To avoid a gap, you can apply and pick a plan up to 60 days before job coverage ends. Coverage then starts the first of the month after your last day of employer coverage.

COBRA is retroactive to the day you lost job-based coverage, so your first payment may cover more than one month. You can choose to pay only for the months you want coverage.

A spouse's or parent's group plan starts the first of the month after you request special enrollment.

Can you sign up for COBRA now and switch to a Marketplace plan later?

Yes, but only in certain cases. If you elected COBRA, you can still switch using your original Special Enrollment Period until 60 days after you lost your pre-COBRA job coverage.

Outside Open Enrollment, HealthCare.gov says you can switch from COBRA to a Marketplace plan when:

1. Your COBRA is running out.
2. Your former employer stops contributing to the cost.
3. You lose a government subsidy and must pay the full cost.
4. You're still within 60 days of losing job coverage.

If you end COBRA early for another reason, you must wait for Open Enrollment unless another life event qualifies you. Voluntarily dropping COBRA or choosing to stop paying does not qualify you for a Special Enrollment Period.

When an employer's COBRA help ends

Say your former employer pays your COBRA premium for three months as part of severance. When that help ends, it does not open a new special enrollment for group coverage, such as a spouse's job plan. Depending on your state, you may still qualify for a Marketplace Special Enrollment Period.

Do premium tax credits apply to COBRA?

No. Premium tax credits apply to Marketplace plans. But being eligible for COBRA doesn't block them. People who elected COBRA may still qualify for advance premium tax credits or cost-sharing reductions if they end COBRA by the time their Marketplace plan starts.

Settling up at tax time

If advance premium tax credits are paid for you, you must file Form 8962 with your tax return to reconcile them with your actual income. For tax years after 2025, there is no repayment cap. Any excess is fully subtracted from your refund or added to what you owe.

The IRS says to report income changes to the Marketplace promptly, including lump-sum retirement distributions. That way your advance credit can be adjusted and you're less likely to owe. A new job, severance, or a retirement withdrawal later in the year are all worth reporting.

Can your spouse take COBRA while you get a Marketplace plan?

A household doesn't have to make one choice for everyone. In a CMS example, the employee decides whether to elect COBRA for a spouse and child or whether they may qualify for Medicaid, CHIP, or other coverage. So one family could have a mix, such as COBRA for one person and a Marketplace plan or Medicaid for others.

If a spouse's employer offers group coverage, you can join it by requesting special enrollment within 30 days of losing your job coverage. Remember that an affordable offer from a spouse's job blocks Marketplace tax credits even if you decline it.

What if you're close to 65 or eligible for Medicare?

If you're eligible for Medicare, COBRA works differently.

COBRA doesn't extend your Part B window

If you're eligible for Medicare, you have up to 8 months after you stop working, or lose your health insurance if that happens first, to sign up for Part B without a penalty. That clock runs whether or not you choose COBRA.

If you miss that window, you must wait for the January 1 to March 31 sign-up period. You may face a gap in coverage and a lifetime Part B late enrollment penalty. See how the Part B late enrollment penalty works.

COBRA may pay little once you're Medicare-eligible

If you have COBRA and are eligible for Medicare but not enrolled, COBRA may pay only a small part of your costs. Medicare.gov says to ask your COBRA plan what percent it pays and to contact your SHIP.

What happens to COBRA when Medicare starts

If you're on COBRA and then enroll in Medicare for the first time, COBRA may end for you. It continues for other qualified beneficiaries, such as a spouse. If you already had Medicare Part A before electing COBRA, adding Part B doesn't end COBRA.

If you're a covered employee who becomes eligible for Medicare, CMS advises talking with your SHIP about Part B and Medigap before you elect COBRA. Our turning 65 Medicare checklist and guide to health insurance before Medicare can help you plan the handoff.

What about Medicaid and CHIP?

If you qualify for Medicaid or the Children's Health Insurance Program (CHIP), you can enroll at any time, and coverage can start right away. HealthCare.gov says to wait for a final Medicaid or CHIP decision before you end COBRA. In Texas, Medicaid is run by Texas Health and Human Services.

COBRA vs Marketplace in Texas: what's different?

Texas state continuation

Texas state continuation lets a former employee and family stay on their plan by paying the full premium. It lasts:

• Up to 9 months if you aren't eligible for COBRA.
• Up to 6 more months after COBRA ends.

TDI's table shows an employee can have up to 18 months of COBRA plus 6 months of state continuation, for 24 months total.

Conditions apply. It covers only plans from licensed insurers and HMOs under the Texas Insurance Code, not self-funded (ERISA) employer plans. It generally requires coverage for the three months before the job ended. It usually isn't available if you were fired. Ask your former employer which kind of plan you had.

Buying Marketplace coverage in Texas

TDI says Texans buy Marketplace coverage through HealthCare.gov or by calling 800-318-2596. Our Texas Health Insurance Marketplace guide explains how plans are sold in the state.

TDI also advises buying only from licensed companies and agents. You can check a license through the TDI Help Line at 800-252-3439 or on TDI's website. See how to verify a Texas insurance agent license.

Common mistakes to avoid

• Letting the 60-day window pass, then dropping COBRA. After that window, leaving COBRA on purpose or not paying doesn't let you switch until Open Enrollment, unless another life event qualifies you.
• Assuming a COBRA subsidy ending reopens group enrollment. It doesn't open a new special enrollment for group coverage, though a Marketplace Special Enrollment Period may apply depending on your state.
• Waiting for COBRA to end before signing up for Part B. The 8-month window runs whether or not you choose COBRA.
• Leaving out income from earlier in the year. Marketplace savings use full-year household income.
• Not reporting income changes. With no repayment cap after 2025, an outdated estimate can mean owing more at tax time.
• Waiting for a COBRA bill. Plans don't have to send one, and if you miss the grace period, coverage can end and the plan isn't required to reinstate it.

How to decide between COBRA and a Marketplace plan

1. Find your dates. Write down your last day of employer coverage and the date your COBRA election notice arrived.
2. Estimate full-year household income. Include what you earned before the job ended.
3. Get a COBRA price. The Department of Labor says to contact your plan sponsor to find out exactly how much COBRA will cost. Ask whether your employer will pay any part as severance, and for how long.
4. Check Marketplace prices and savings on HealthCare.gov for the same months.
5. Compare total cost. Add premiums to likely deductibles and coinsurance, and count what you've already paid toward your current deductible.
6. Check networks and drug lists for every doctor and medication you rely on.
7. Look at each family member. Consider a spouse's plan, Medicaid, or CHIP for some people.
8. If you're near 65, talk to a SHIP counselor before electing COBRA and mark your Part B deadline.
9. Make your choice inside the 60-day window, and set reminders for each COBRA payment if you elect it.

Where can you get help?

• HealthCare.gov Marketplace Call Center: 1-800-318-2596
• TDI Help Line: 800-252-3439
• Your SHIP: counseling on COBRA, Part B, and Medigap if you're Medicare-eligible
• U.S. Department of Labor: its COBRA FAQs explain election and payment rules

A licensed agent can compare Marketplace plans with your COBRA offer side by side. MeetBrokers is free to use, and every listed agent holds a state license that anyone can verify by National Producer Number. Profiles marked "unclaimed" come from public licensing records.

Browse licensed health insurance agents in Texas, or if Medicare is close, Medicare agents in Texas. You can also request help from an agent you choose. Your request goes only to that agent. MeetBrokers is not connected with or endorsed by the U.S. government or the federal Medicare program.