COBRA vs. marketplace coverage

The deadline picture, first

Health coverage decisions after a layoff feel urgent, but the system is built with windows, not cliffs. Two general rules carry most of the weight:

• ✓COBRA: you generally have 60 days to elect continuation coverage, counted from the later of the date you receive your election notice or the date your coverage ends. If you elect, coverage is retroactive to the day your employer coverage stopped.
• ✓Marketplace: losing job-based coverage is a qualifying life event that opens a special enrollment period on the health insurance marketplace — generally a 60-day window around the loss of coverage.

What COBRA is

COBRA is a federal law that generally lets employees of covered employers (typically those with 20 or more employees) keep their exact group health plan after leaving, usually for up to 18 months. Many states have similar 'mini-COBRA' rules for smaller employers.

The catch is the price. While employed, your employer likely paid a large share of the premium. Under COBRA you generally pay the full premium yourself, plus a small administrative fee — which is why the same plan suddenly costs several times what came out of your paycheck.

What you get for that price: continuity. Same network, same deductible progress in many plans, same coverage for ongoing treatment. For someone mid-treatment, mid-pregnancy, or attached to specific doctors, that continuity can be worth a great deal.

What the marketplace offers

Marketplace plans (HealthCare.gov or your state's exchange) are priced on your household income for the year. After a layoff, your expected annual income may drop — which can qualify you for premium tax credits that make marketplace coverage substantially cheaper than COBRA.

The trade-offs: networks and formularies differ from your old plan, deductibles reset when you switch, and you'll need to check that your doctors and medications are covered under any plan you're considering.

A calm comparison method

You can make this decision in one sitting with four numbers:

1. 01Get your COBRA price from the election notice (or ask HR before you leave).
2. 02Estimate your household income for this calendar year — including the months you already worked and any severance.
3. 03Browse marketplace plans with that income estimate and note the real premium after any tax credit, plus the deductible.
4. 04Weigh continuity: ongoing treatments, upcoming procedures, prescriptions, and how much deductible you've already met this year.

The 60-day breathing room, used wisely

Because COBRA election is retroactive, some people wait within the 60-day window: if something happens, they elect COBRA and are covered back to day one; if nothing happens, they move to a marketplace plan. This is a real feature of the system — but it requires you to actually track the window and understand that you'd owe the retroactive premiums if you elect. Do not let the window lapse while undecided; a lapsed window means a lapse in options.

Rules, prices, and subsidy details change and vary by state and plan. Confirm the specifics in your election notice, on your state's marketplace, or with a licensed insurance navigator — navigators are free.