Losing Job-Based Coverage: Comparing COBRA and the Marketplace

Losing a job often means losing health insurance at the same moment, usually when money is tight and decisions feel rushed. Two options come up most: keeping your old employer plan through COBRA, or buying a plan through the Health Insurance Marketplace. A spouse's or parent's job-based plan, Medicaid and CHIP may also be on the table.

Each path has its own deadlines, and some choices can't easily be undone. Dropping COBRA early, for instance, can leave you waiting months for another chance to enroll. This guide compares the two main options and the timelines that matter.

This is general information, not insurance, tax or legal advice. For your situation, contact the U.S. Department of Labor's benefits advisors, the Marketplace Call Center, a free local assister or your state insurance department.

What COBRA is and who offers it

COBRA is a federal law that lets workers and their families temporarily keep job-based health coverage after events such as job loss or reduced hours. As of 2026, the Department of Labor's COBRA questions and answers say it applies to plans of private-sector employers and unions with 20 or more employees, and to state and local governments. It doesn't cover plans sponsored by the federal government or by churches and certain church-related organizations.

Smaller employers aren't always off the hook. The Department of Labor notes that many states have similar "mini-COBRA" laws that may cover employers with fewer than 20 employees, and suggests checking with your state insurance commissioner's office.

How long COBRA lasts depends on the event. In its 2026 FAQ, the Department of Labor lists up to 18 months after job termination (other than for gross misconduct) or reduced hours, and up to 36 months for a spouse or dependent child after events such as divorce or the employee's death. A disability extension can stretch coverage to 29 months.

What COBRA costs

COBRA's big advantage is continuity. The Department of Labor's 2026 FAQ says you get the same health benefits as active employees, including the same coverage, copays, deductibles and claims and appeals process you had before.

Its big drawback is price. The Department of Labor says you usually pay the full premium, meaning your old share plus the part your employer used to pay, plus two percent. During a disability extension, the plan may charge up to 150 percent of the premium. Some employers agree to pay part of the cost as part of a severance package, but they aren't required to.

The COBRA timeline

The Department of Labor's 2026 FAQ sets out these deadlines:

• Your plan must send an election notice within 44 days after the qualifying event, or 14 days after you notify the plan of events such as divorce.
• You have 60 days to elect COBRA, starting from when your coverage ends or when the election notice is provided, whichever is later.
• After electing, you have 45 days to make your first payment. Because COBRA is retroactive to the day you lost your plan, that first payment may cover more than one month.
• Later payments come with a 30-day grace period. If you miss it, the plan can end your coverage and isn't required to reinstate it.

The Marketplace route

Losing job-based coverage opens a Special Enrollment Period. As of October 2026, HealthCare.gov says you can enroll in a Marketplace plan within 60 days of losing job-based coverage, and its Special Enrollment Period page says you may also qualify if you expect to lose coverage in the next 60 days, so you can line up a plan in advance.

Savings depend on income, not employment status. HealthCare.gov's 2026 guidance says savings are based on your household size and estimated income for the year you need coverage, and that unemployment compensation counts as income. For 2026, the IRS says the premium tax credit is generally available for household incomes from 100% to 400% of the federal poverty line.

Being offered COBRA doesn't block you from Marketplace help. The Department of Labor's COBRA guide says an offer of COBRA doesn't make you ineligible for Marketplace coverage or a tax credit, and the IRS (in guidance updated February 19, 2026) says you can decline COBRA, even if it's affordable, and may be eligible for the premium tax credit. Just don't plan on stacking the two: the IRS says that if you enroll in an employer-sponsored plan, you aren't eligible for the credit for your own Marketplace coverage.

Switching later: the rules that trip people up

Starting with COBRA and moving later is possible, but only at certain times. As of 2026, HealthCare.gov says:

• During Open Enrollment, you can switch from COBRA to a Marketplace plan for any reason.
• Outside Open Enrollment, you can switch if your COBRA is running out, if you must pay the full cost because your former employer stops contributing, or if you're still within 60 days of losing your job-based coverage.
• When COBRA ends on schedule, you have 60 days to enroll in a Marketplace plan.
• If you voluntarily drop COBRA early or stop paying premiums, that doesn't qualify you for a Special Enrollment Period. You'd generally wait until the next Open Enrollment unless another life event qualifies you.

HealthCare.gov's 2026 guidance also advises checking your new coverage start date before ending COBRA, and, if you've applied for Medicaid or CHIP, waiting for a final decision before you drop it. Medicaid and CHIP accept applications year-round.

Other options to compare

The Department of Labor lists a spouse's or parent's job-based plan as an alternative, but the window is short: you generally must request special enrollment within 30 days of losing your coverage. If you're near Medicare age, the Department of Labor also cautions that choosing COBRA without enrolling in Medicare when you're eligible can create unexpected costs, because the plan may treat Medicare as primary. State Health Insurance Assistance Program (SHIP) counselors offer one-on-one, unbiased help with Medicare timing.

A step-by-step way to decide

1. Write down the date your job-based coverage ends and the date your COBRA notice arrives.
2. Ask the plan for the exact monthly COBRA premium for everyone you'd cover.
3. Fill out a Marketplace application to see real prices and savings; applying doesn't commit you to a plan.
4. Check whether your doctors, hospitals and prescriptions are covered under each option.
5. Weigh continuity against cost. Keeping the same plan can matter if you're in the middle of treatment, while HealthCare.gov notes that Marketplace plans may cost less than COBRA, especially if you qualify for savings.
6. Put every deadline on your calendar, using the 2026 Department of Labor and HealthCare.gov rules above: 30 days for a family member's plan, 60 days for the Marketplace and for electing COBRA, and 45 days for the first COBRA payment.

For example, imagine a hypothetical worker laid off in March whose spouse has job-based coverage. They might apply to the Marketplace, compare its price with adding themselves to the spouse's plan within 30 days, and elect COBRA only if a medical need makes keeping the current network worth the cost.

Key takeaways

• The Department of Labor says COBRA generally lasts up to 18 months after job loss and usually costs the full premium plus two percent.
• You have 60 days to elect COBRA and 45 more days to make the first payment, and coverage is retroactive.
• HealthCare.gov gives you 60 days after losing job-based coverage to pick a Marketplace plan, with savings based on expected income.
• Being offered COBRA doesn't block Marketplace savings, but dropping COBRA voluntarily doesn't open a Special Enrollment Period.
• Compare full costs, networks and deadlines before you decide, and get free help if you're unsure.

Sources

• U.S. Department of Labor, Employee Benefits Security Administration, FAQs on COBRA Continuation Health Coverage for Workers
• U.S. Department of Labor, Employee Benefits Security Administration, An Employee's Guide to Health Benefits Under COBRA
• HealthCare.gov, COBRA coverage when you're unemployed
• HealthCare.gov, Health coverage options if you're unemployed
• HealthCare.gov, Special Enrollment Periods
• HealthCare.gov, What to include as income
• Internal Revenue Service, Questions and answers on the Premium Tax Credit (updated February 19, 2026)