COBRA lets you keep your employer’s health plan after you lose your job—but you’ll pay the full premium yourself, plus a 2% administrative fee. For most people, that works out to $500–$2,500 per month depending on whether you’re covering yourself or a family, and there’s no employer contribution anymore.

Quick verdict:

  • COBRA is the best choice if you’re mid-treatment with specialists in your current plan’s network, earn too much for marketplace subsidies, or need seamless continuity for 3–6 months while you transition.
  • ACA Marketplace coverage is the best choice if your income qualifies you for subsidies (under $60,000/year for an individual in 2024), you’re comfortable switching networks, or you need coverage lasting longer than 18 months.

At a glance

FactorCOBRAACA Marketplace
Monthly cost (2024)$500–$800 (individual)
$1,200–$2,500 (family)		$50–$600 (individual, after subsidy)
$150–$1,800 (family, after subsidy)
Who qualifiesEmployees of companies with ≥20 workers who lose coverage due to job loss, hour reduction, or other qualifying eventAnyone; subsidies available for income 100–400%+ of federal poverty level
How long it lasts18 months (typically)
36 months for spouses/dependents after divorce or death		Renews annually; no time limit
NetworkYour former employer’s exact plan and networkMultiple insurers; may require new doctors
Subsidies availableNo (with rare exceptions)Yes, if income qualifies
Covers pre-existing conditionsYesYes
Best forPeople mid-treatment or transitioning for a few monthsMost people, especially those with moderate income
Biggest weaknessVery expensive; lasts only 18 monthsRequires changing networks; annual re-enrollment

What COBRA is (and what it isn’t)

COBRA—the Consolidated Omnibus Budget Reconciliation Act of 1985—is a federal law that lets you stay on your former employer’s group health plan after you lose coverage. It’s not a separate insurance plan; you’re paying to remain on the same plan you had while employed, with the same doctors, network, deductible, and prescription coverage.

The catch: you now pay what your employer used to subsidize. Before you lost your job, your employer covered a substantial portion of the premium cost. Under COBRA, you pay 100% of the group premium plus a 2% administrative fee (102% total). That full cost comes as a shock to most people.

COBRA kicks in when you experience a “qualifying event”—job loss (voluntary or involuntary, unless you were fired for gross misconduct), reduction in hours that drops you below eligibility, divorce, death of the covered employee, or a dependent child aging out of the plan. Your employer must notify you of your COBRA rights within 14 days of the qualifying event. You then have 60 days from the date you receive that notice (or the date you lose coverage, whichever is later) to decide whether to enroll.

If you enroll within that 60-day window, coverage is retroactive to the date you lost your employer plan. Miss the deadline, and you lose COBRA eligibility permanently—you’ll need to wait for the marketplace’s open enrollment period or qualify for a Special Enrollment Period.

Source: U.S. Department of Labor COBRA fact sheet

Who qualifies for COBRA (eligibility requirements)

COBRA eligibility is narrower than most people assume. Here’s who does and doesn’t qualify:

You qualify if:

  • Your employer had 20 or more employees on more than 50% of working days in the prior calendar year
  • You were enrolled in your employer’s group health plan when employed
  • You lost coverage due to job loss, hour reduction, divorce, death, or another qualifying event
  • You were not terminated for gross misconduct

You do NOT qualify if:

  • Your employer has fewer than 20 employees (see state continuation coverage below)
  • You’re self-employed or a 1099 contractor
  • You voluntarily dropped coverage before the qualifying event
  • You were fired for gross misconduct (this is rare and narrowly defined)

Small employers and state continuation coverage: If your employer has fewer than 20 employees, federal COBRA doesn’t apply—but many states have their own continuation laws. States including California, New York, Texas, New Jersey, Massachusetts, and Vermont require smaller employers to offer continuation coverage, though the rules, duration, and cost vary by state. Check your state’s Department of Insurance website or contact your employer’s benefits administrator to confirm what’s available.

Part-time employees generally qualify for COBRA if they were covered under the employer plan while working part-time. COBRA doesn’t discriminate based on hours worked.

Federal employees, church employees, and some government workers are covered by different continuation rules (not COBRA)—check with your HR department.

How much COBRA costs

Person receiving job termination letter, the qualifying event triggering COBRA eligibility.
Photo by https://kaboompics.com/ on Pexels

COBRA premiums equal 102% of the full group plan premium—100% of what the plan actually costs, plus a 2% administrative fee. There is no employer contribution, no subsidy, and premiums are paid with after-tax dollars (you can’t deduct them unless you’re itemizing medical expenses above 7.5% of your adjusted gross income, which is rare).

Typical 2024 COBRA costs:

  • Individual coverage: $500–$800/month for a mid-tier PPO
  • Family coverage: $1,200–$2,500/month depending on plan type and region
  • High-deductible health plans (HDHPs) tend to fall at the lower end; richer PPO plans with lower deductibles cost more

These are national averages; your actual cost depends on your former employer’s specific plan, your state, and whether you’re covering dependents. The first premium payment is usually due within 45 days of electing COBRA, and it covers the retroactive period from your job loss date forward.

No ongoing federal subsidy exists. The American Rescue Plan Act (ARPA) subsidized 100% of COBRA premiums for eligible individuals between April and September 2021, but that program expired and has not been renewed. Do not expect a COBRA subsidy unless new legislation passes.

Tax treatment: COBRA premiums are not pre-tax payroll deductions. You pay with after-tax dollars, and you cannot use the self-employed health insurance deduction for COBRA premiums (that deduction applies only to marketplace or private insurance). If your former employer plan was a high-deductible health plan (HDHP) and you were contributing to a Health Savings Account (HSA), you can continue HSA contributions while on COBRA only if the COBRA plan remains HDHP-qualified and you have no other disqualifying coverage.

Source: Healthcare.gov COBRA coverage overview

COBRA vs marketplace insurance: when each makes sense

The question most people face is whether to pay for COBRA or shop the ACA marketplace. The answer almost always comes down to income, network preferences, and how long you need coverage.

Cost comparison with subsidies

If your household income is between 100% and 400% of the federal poverty level—roughly $15,000 to $60,000 for an individual, or $31,000 to $125,000 for a family of four (2024 figures)—you likely qualify for premium tax credits (subsidies) on the marketplace. Thanks to the Inflation Reduction Act, subsidies now extend beyond 400% FPL for those who would otherwise pay more than 8.5% of income for the benchmark Silver plan.

Real-world illustration (based on 2024 data):
A 50-year-old living in North Carolina who just lost their job and is earning $45,000/year would face approximately:

  • COBRA: ~$700/month (no subsidy)
  • Marketplace Silver plan (after subsidy): ~$120/month

For most subsidy-eligible people, the marketplace is dramatically cheaper. Even if you’re earning above 400% FPL and don’t qualify for subsidies, marketplace plans are often competitively priced compared to COBRA because you’re buying based on your individual risk profile, not your former employer’s group experience rating.

Source: Kaiser Family Foundation health insurance marketplace analysis

Network and continuity

COBRA’s main advantage is continuity. You keep your exact plan, your doctors stay in-network, your deductible and out-of-pocket maximum carry over from earlier in the year, and there’s no disruption to prior authorizations or ongoing treatments.

Marketplace plans require you to choose a new insurer, and that often means a new provider network. If you’re mid-chemotherapy, seeing a specialist for a chronic condition, or scheduled for surgery, switching networks can be disruptive—and in some cases, your preferred providers won’t accept the new plan at all.

If continuity matters more than cost (and you can afford COBRA), it’s a reasonable short-term bridge. But if you’re healthy, not tied to specific specialists, or simply can’t afford $600–$2,000/month, the marketplace is the better long-term option.

Duration and portability

COBRA typically lasts 18 months. If you’re a spouse or dependent losing coverage due to divorce or the employee’s death, you may get up to 36 months. After that, COBRA ends—you’ll need to enroll in marketplace coverage, find employer coverage through a new job, or explore other options.

Marketplace coverage renews annually during open enrollment (November 1 – January 15 for most states). There’s no duration limit. You can stay on a marketplace plan indefinitely as long as you pay premiums and re-enroll each year. If your income or household size changes, your subsidy adjusts accordingly.

For anyone expecting to be between jobs for more than six months, or anyone laid off close to age 65 (when Medicare eligibility begins), the marketplace offers more flexibility than COBRA’s fixed 18-month window.

Pre-existing conditions

Both COBRA and marketplace plans cover pre-existing conditions without exclusions or waiting periods. The Affordable Care Act eliminated medical underwriting for all individual and group health plans in 2014. Whether you have diabetes, cancer, or a heart condition, you cannot be denied coverage or charged a higher premium on either COBRA or the marketplace based on your health status.

This is a significant difference from short-term health plans, which can exclude pre-existing conditions. If you’re choosing between COBRA and marketplace coverage, both offer full protection—short-term plans do not.

Source: Healthcare.gov pre-existing conditions fact sheet

What COBRA covers (and what it doesn’t)

Doctor consulting with patient, representing healthcare network access and care continuity.
Photo by cottonbro studio on Pexels

COBRA is not a new plan—it’s the continuation of your existing employer plan, so you get:

  • The same benefits: medical, prescription drug, dental, and vision (if those were part of your employer plan)
  • The same network of doctors and hospitals
  • The same deductible, co-pays, coinsurance, and out-of-pocket maximum
  • The same prescription drug formulary

What COBRA does NOT let you do:

  • Switch to a different plan offered by your employer mid-year (you’re locked into the plan you had at termination, though you may be able to switch during the employer’s open enrollment if you’re still on COBRA)
  • Get a subsidy or employer contribution toward premiums
  • Use pre-tax dollars to pay premiums (you pay with after-tax money)
  • Extend coverage beyond 18 months (or 36 for certain dependents)

What can change while you’re on COBRA:

  • Provider networks can shrink or expand
  • Drug formularies can change (your medication may move to a higher tier or require prior authorization)
  • The employer can change plans entirely during their renewal; if that happens mid-COBRA, you’ll typically move to the new plan

How to decide: a step-by-step guide

If you’ve just lost employer coverage and are weighing COBRA vs. marketplace, work through these questions:

  1. Can you afford COBRA? If the monthly premium is more than 10% of your income, the marketplace is almost certainly a better fit.

  2. What’s your income? If you’re earning under 400% of the federal poverty level (~$60,000 for an individual), go to Healthcare.gov and run the subsidy calculator. You’ll likely qualify for hundreds of dollars per month in premium tax credits.

  3. Are you mid-treatment or seeing specialists? If you’re scheduled for surgery, undergoing chemotherapy, or seeing a specialist who only accepts your current plan’s network, COBRA may be worth the cost for continuity—at least for a few months while you transition.

  4. How long do you need coverage? If you expect to find a new job with benefits in 2–3 months, COBRA may bridge the gap. If you’ll be out of work for six months or longer, marketplace coverage offers more flexibility and lower cost.

  5. Do you qualify for COBRA? Confirm your employer had 20+ employees and that you’re within the 60-day election window. If you work for a smaller employer, check whether your state offers continuation coverage with different rules.

For most people, the answer is marketplace coverage. The subsidies are significant, and unless you have a compelling medical reason to stay with your current network, the savings are too large to ignore.

Frequently asked questions

Can I switch from COBRA to marketplace coverage mid-year?

Yes. Losing employer coverage (including electing COBRA and later dropping it) qualifies you for a Special Enrollment Period on the marketplace. You have 60 days from the date you lose COBRA to enroll in a marketplace plan. Many people elect COBRA initially to avoid a coverage gap, then switch to a cheaper marketplace plan once they’ve compared options.

What happens if I miss the 60-day COBRA election deadline?

You lose the right to elect COBRA, and coverage is not retroactive. You’ll need to enroll in marketplace coverage during the next open enrollment period (November 1 – January 15) or wait for another qualifying life event that triggers a Special Enrollment Period. Missing the COBRA deadline is one of the most common regrets—set a calendar reminder the day you receive your COBRA notice.

Does COBRA cover my spouse and children?

Yes, if they were covered under your employer plan when you lost coverage. You can elect COBRA for yourself, your spouse, your children, or any combination. Each person you cover increases the monthly premium accordingly (family coverage costs significantly more than individual coverage).

Can I use a Health Savings Account (HSA) while on COBRA?

Only if your COBRA plan is a high-deductible health plan (HDHP) that qualifies for HSA contributions. If your former employer plan was not an HDHP, you cannot contribute to an HSA while on COBRA. You can still withdraw from an existing HSA to pay for qualified medical expenses (including COBRA premiums if you’re receiving unemployment benefits), but new contributions require HDHP coverage.

Is COBRA available if I quit my job voluntarily?

Yes. COBRA applies whether you quit, were laid off, or were fired (as long as the termination wasn’t for gross misconduct). Voluntary resignation is a qualifying event.

How does COBRA work if I’m close to Medicare age?

If you’re 63 or 64 and lose employer coverage, you can elect COBRA and stay on it until you turn 65 and qualify for Medicare. COBRA ends when you enroll in Medicare Part A and Part B. Some people choose marketplace coverage instead if it’s cheaper, but COBRA is an option. Once you’re on Medicare, you cannot have COBRA and Medicare simultaneously—Medicare becomes your primary coverage.

Not insurance or financial advice. COBRA eligibility, costs, and coverage vary by employer, state, and individual circumstance. Premium amounts and subsidy levels shown are illustrative and based on 2024 data; your actual costs will differ. Compare specific plans on Healthcare.gov or consult your former employer’s benefits administrator before making a coverage decision. This article is for informational purposes only.