October 3, 2026 · Guides
Updated October 2026 for the 2027 plan year
Key facts (2027 plan year)
- Federal COBRA generally applies to private employers with 20 or more employees, and most state and local government plans; many states have “mini-COBRA” laws for smaller employers (U.S. Department of Labor).
- A plan can charge up to 102% of the total cost of coverage (employee plus employer share, plus 2% for administration), or up to 150% during a disability extension (DOL employer guide).
- You get at least 60 days to elect COBRA, at least 45 days after electing to make the first payment, and a 30-day grace period each month (DOL).
- COBRA usually lasts 18 months after a job loss, and up to 29 or 36 months in some cases (DOL).
- You can switch from COBRA to a Marketplace plan within 60 days of losing job coverage, at Open Enrollment, or when COBRA runs out; dropping COBRA early on your own does not open a Special Enrollment Period (HealthCare.gov).
- Being offered COBRA does not block a premium tax credit; you can decline it and still qualify (IRS Q&A).
- Workers with job coverage paid on average 16% of the premium for single coverage and 26% for family coverage in 2025, so COBRA’s 102% can be several times what you paid at work (KFF).
What is COBRA insurance?
COBRA insurance is temporary continuation of your employer’s group health plan after you lose your job, your hours are cut or another qualifying event ends your coverage. It is named for the federal law that created it, the Consolidated Omnibus Budget Reconciliation Act of 1985. Your coverage stays the same; you just pay for it yourself.
Same insurer, same network, same doctors, same deductible. COBRA can also cover your spouse and dependent children who were on the plan.
COBRA generally applies to private employers with 20 or more employees and to most state and local government plans. If your employer is smaller, your state may have a “mini-COBRA” law; ask your state insurance department. The federal rules are explained by the U.S. Department of Labor at DOL.gov.
| Qualifying event | Maximum COBRA length |
|---|---|
| Job loss (not for gross misconduct) or reduced hours | 18 months |
| Disability (Social Security finds you disabled within the first 60 days) | Up to 29 months |
| Divorce, death of the employee, or a child aging off the plan | Up to 36 months for the spouse or child |
How much is COBRA?
COBRA can cost up to 102% of the full premium for your plan: the share you paid at work, plus the share your employer paid, plus 2% for administration. During an 11-month disability extension, it can go up to 150%. There is no tax credit for COBRA premiums.
That is why COBRA feels so expensive. Your employer was quietly paying most of the bill. In 2025, workers paid on average 16% of the premium for single coverage and 26% for family coverage, according to the KFF Employer Health Benefits Survey.
| Coverage | Average worker share at work (KFF 2025) | Maximum COBRA charge | Rough multiple |
|---|---|---|---|
| Single | 16% | 102% | About 6 times |
| Family | 26% | 102% | About 4 times |
| Disability extension (months 19–29) | — | Up to 150% | — |
Your own number is on your COBRA election notice. To work it out yourself, take the full monthly premium (employee plus employer share) and multiply by 1.02. Ask HR for the total premium if it isn’t on your pay stub.
This is where the COBRA vs Marketplace math flips. A subsidized Marketplace plan changes the picture. Because the premium tax credit is tied to your new, lower income, the person facing a full-cost COBRA bill may find a comparable Marketplace plan for much less. Our guide to affordable health insurance options shows how to find the lowest responsible price.
What is a Marketplace plan?
A Marketplace plan is an individual health plan you buy through the Health Insurance Marketplace, on HealthCare.gov or your state exchange. Losing job-based coverage opens a 60-day Special Enrollment Period, so you can enroll right away. These plans cover pre-existing conditions and the ten essential health benefits.
The reason a Marketplace plan is often cheaper is the premium tax credit. When your income drops after a job loss, you may qualify for a credit based on your new expected income for the year, not the salary you left. For 2027, the credit caps the benchmark Silver plan at 2.15% to 10.22% of household income for people from 100% to 400% of the poverty level.
Full-price premiums rose sharply in 2026, and insurers proposed a median increase of about 15% for 2027 (KFF). You can compare plans and see your subsidy at HealthCare.gov.
COBRA vs Marketplace: a side-by-side comparison
Both COBRA and a Marketplace plan keep you insured after a job loss, but they differ on cost, flexibility and deadlines. This COBRA vs Marketplace table lays them side by side.
| Feature | COBRA | Marketplace plan |
|---|---|---|
| Monthly cost | Up to 102% of the plan’s full premium | Varies by plan; with a credit you pay a capped share of income for the benchmark Silver plan |
| Subsidies available? | No | Yes, premium tax credits based on your new income |
| Keeps your current plan? | Yes, same insurer, network and deductible | No, you choose a new plan and network |
| How long it lasts | Up to 18 months (29 or 36 in some cases) | As long as you pay and stay eligible |
| Deadline to sign up | At least 60 days from the later of the notice or loss of coverage | 60 days from loss of job coverage |
| Deductible | Your spending this year carries over | Usually starts over on the new plan |
| Best for | Mid-treatment care, a met deductible, short gaps | Lower income, cost savings, longer gaps between jobs |
The biggest difference is money: COBRA offers no financial help, while a Marketplace plan can use credits COBRA can’t match. The main reason to pick COBRA is continuity.
Can I switch from COBRA to a Marketplace plan?
Yes, at certain times. HealthCare.gov says you can switch from COBRA to a Marketplace plan within 60 days of losing your job-based coverage, during Open Enrollment, when your COBRA coverage is running out, or if your former employer stops paying its share and you must pay the full cost.
What you can’t do is drop COBRA early on your own, or stop paying, and expect a new enrollment window. That doesn’t count as a qualifying event, so you’d generally wait for Open Enrollment (HealthCare.gov COBRA page).
Tax credits work the same way. Being offered COBRA doesn’t stop you from getting a premium tax credit; the IRS says you can decline former-employer coverage and still qualify. But for any month you are enrolled in COBRA, you can’t also get a credit for a Marketplace plan. See 2027 subsidies and the premium tax credit for how the credit is figured.
Honesty.AI pulls your real COBRA cost, applies your 2027 subsidy, compares every Marketplace plan, and enrolls you before your 60 days run out.
What are the COBRA and Marketplace deadlines?
After a job loss you are racing two 60-day clocks at once. Missing either one narrows your options.
The first is your COBRA election window: at least 60 days, starting from the later of the date you get the election notice or the date your coverage would end. After you elect, you have at least 45 days to make the first payment, and COBRA then covers you back to the day job coverage ended.
The second is your Marketplace Special Enrollment Period: 60 days from losing job coverage to pick a plan. You can also report the loss up to 60 days in advance if you know it is coming.
Treat the COBRA vs Marketplace choice as one decision with one deadline. Use those weeks to get your real COBRA premium, estimate your 2027 income and price a subsidized plan. If both clocks expire, you could be uninsured until Open Enrollment, which for 2027 coverage runs November 1, 2026 to January 15, 2027 on HealthCare.gov (enroll by December 15 for a January 1 start). KFF notes subsidy rules tightened after the enhanced credits expired at the end of 2025.
When might COBRA be the better choice?
Cheaper is not always better. In the COBRA vs Marketplace comparison, COBRA earns its keep when switching plans would disrupt care you are already getting.
- You are mid-treatment. If you are partway through chemotherapy, a pregnancy or a surgery series, keeping your exact plan avoids new doctors and new prior authorizations.
- You have already met your deductible. COBRA keeps your spending; a new Marketplace plan usually starts the deductible over.
- Your income is too high for a subsidy. With the 400% poverty-level cliff for 2027 coverage, higher earners may get little or no credit.
- Your gap is short. If a new job with coverage starts in a few weeks, a brief stretch of COBRA can be simpler.
Even then, compare. A Gold or Platinum Marketplace plan can sometimes include your doctors at a lower total cost than COBRA. Never choose COBRA by default without checking the subsidized Marketplace price first.
What should I do after losing my job?
A job loss is stressful, but the path to affordable coverage is straightforward if you move within your 60-day window. Work the COBRA vs Marketplace comparison in order.
- Find your coverage end date. Ask HR the exact day your job-based plan ends.
- Get your COBRA number. Read the election notice and note the full monthly premium; this is your baseline.
- Estimate your 2027 income. Your Marketplace subsidy depends on what you expect to earn this year.
- Price a subsidized Marketplace plan. Report your loss of coverage at HealthCare.gov or your state exchange, then compare plans and your premium tax credit.
- Compare total cost. Weigh premium, deductible and whether your doctors are in network.
- Enroll and pay your first premium before your window closes so coverage has no gap.
If you may qualify for Medicaid because your income dropped, you can apply any time. And if comparing plans feels overwhelming during a job search, see how Honesty.AI works for a guided, pressure-free comparison. Honesty® is a licensed AI insurance agent from Honesty® Insurance Services, LLC (NPN 21094885).
Losing your job shouldn’t mean overpaying for coverage
Honesty.AI compares your COBRA cost against every subsidized Marketplace plan, applies your 2027 premium tax credit, and enrolls you before your Special Enrollment Period ends — free, unbiased, and available 24/7 by chat, voice, or text. It never earns more by steering you one way.
Retiring before 65? Our guide to health insurance for early retirees covers COBRA, Marketplace plans, retirement income and the switch to Medicare.
Frequently asked questions
What is COBRA insurance?
COBRA insurance is temporary continuation of your employer’s group health plan after a job loss, reduced hours or another qualifying event. You keep the same plan, network and doctors, usually for up to 18 months, but you pay the full premium yourself. It generally applies to employers with 20 or more employees.
How much is COBRA?
COBRA can cost up to 102% of your plan’s full premium: your share, your employer’s share and a 2% administrative fee, or up to 150% during a disability extension. Because workers paid on average 16% of single-coverage premiums at work in 2025, COBRA often costs several times what you paid through payroll.
Is COBRA or a Marketplace plan cheaper?
For most people who lose a job, a Marketplace plan is cheaper because it can qualify for a premium tax credit based on your lower income. COBRA has no subsidy. Always compare both before deciding.
Can I switch from COBRA to a Marketplace plan?
Yes, within 60 days of losing your job-based coverage, during Open Enrollment, when COBRA is running out, or if your former employer stops paying its share. Dropping COBRA early on your own, or stopping payments, does not open a Special Enrollment Period.
Does being eligible for COBRA stop me from getting a subsidy?
No. You can decline COBRA and still qualify for a premium tax credit on a Marketplace plan. You just can’t get the credit for months you are enrolled in COBRA.
How long do I have to choose between COBRA and the Marketplace?
You have at least 60 days to elect COBRA, starting from the later of your election notice or your coverage end date, and 60 days from losing job coverage to pick a Marketplace plan. Both clocks start around the same time.
When would COBRA be the better choice?
COBRA can be worth it if you are mid-treatment and want to keep your exact doctors, if you have already met your deductible this year, if your income is too high for a subsidy, or if you only need a short bridge before new job coverage starts.
Turning 65 soon? Medicare usually replaces both COBRA and a Marketplace plan, so read Medicaid vs Medicare: the real differences before you decide.
Still deciding? Our guide to health insurance for unemployed people covers Medicaid, a spouse’s plan and the 60-day deadline too.
Keep learning: Special Enrollment Periods explained · How the Health Insurance Marketplace works · Affordable health insurance options · 2027 subsidies and the premium tax credit · Short-term health insurance
