COBRA vs Marketplace: Which Is Cheaper After Job Loss? (2026)

After losing employer coverage you have two main routes: continue the same plan through COBRA, or buy coverage on the health insurance marketplace. COBRA is usually far more expensive because you pay the full premium your employer had been subsidising. Marketplace coverage may be substantially subsidised depending on your income for the year, and that single variable usually decides the answer.

Why COBRA Costs So Much More Than Your Old Payroll Deduction

Your payroll deduction was your share. Employers typically pay the larger part of the premium, so COBRA's full cost commonly runs three to five times what appeared on your payslip, plus a small administrative charge the plan is permitted to add. Nothing about the coverage changed; the subsidy disappeared.

The Department of Labor administers COBRA continuation rules, and the entitlement generally runs for a limited period after qualifying employment ends. It matters because COBRA is a bridge with an expiry date, not a long-term arrangement.

The Case for Paying for COBRA Anyway

Two situations justify the higher cost. First, if you are mid-treatment: switching plans mid-course can change your specialists, your prior authorisations and your formulary tier, and continuity is worth real money in that situation. Second, if you have already met a large deductible this year, since marketplace coverage restarts it at zero.

A household that has already paid $6,000 toward a deductible and expects further care may find COBRA cheaper in total for the remainder of the year despite the much larger premium, purely because the marketplace plan would require meeting a new deductible from scratch.

                Family of four, employer plan ends 30 June
COBRA quote
  Full monthly premium                   $1,880
  Plus 2% administrative charge             $38
  Six months of COBRA                   $11,508
  Deductible already met this year       $5,200
Marketplace, household income $58,000
  Benchmark plan before subsidy       $1,640/mo
  Premium after income-based subsidy    $310/mo
  Six months                             $1,860
  New deductible to meet                 $3,400
  Worst case six-month cost              $5,260
  Marketplace cheaper by                 $6,248
Marketplace, household income $185,000
  Little or no subsidy applies
  Six months at full cost                $9,840
  Plus new deductible                    $3,400
  Worst case                            $13,240
  COBRA cheaper by                       $1,732
The plan did not change. Income decided it.
              

That is the practical rule. On a reduced income, marketplace subsidies usually make it the clear choice; on a high income with a large deductible already met, COBRA can win.

What to Check Before Deciding

Estimate your income for the whole calendar year, not your former salary, since marketplace subsidies are based on annual household income and a mid-year job loss lowers it substantially. Then verify that your doctors and prescriptions are covered under the marketplace plan you are considering.

The Centers for Medicare and Medicaid Services publishes standardised plan information for marketplace coverage, which makes side-by-side comparison of deductibles and cost sharing possible. Get the actual COBRA figure in writing from the plan administrator rather than estimating from your old payslip, because the two bear no relation to each other.

1. Request the exact COBRA premium in writing from the plan administrator.
2. Estimate your household income for the full calendar year, reflecting the job loss.
3. Check marketplace subsidy eligibility at that income before comparing anything.
4. Add the unmet deductible to the marketplace cost, since it restarts at zero.
5. Verify your doctors and prescriptions on any marketplace plan before enrolling.