If you just lost job-based health insurance, you have two main paths: keep your old employer plan through COBRA, or buy a new individual plan on the Health Insurance Marketplace (the ACA plans many people still call Obamacare). COBRA keeps your exact plan, doctors and deductible progress, but you pay the full price. The Marketplace usually costs less, especially if your income qualifies you for a subsidy, but it is a different plan with a different network. The right answer depends on your income, your health needs, your timing and, if you are near 65, Medicare.
This guide walks through each difference, gives you a way to run the numbers, and flags the traps that cost people money. You do not have to decide on day one, but you do have to watch two deadlines.
TL;DR
- COBRA lets you keep your current employer plan, but you generally pay the whole premium plus up to a 2% administrative fee, with no subsidy.
- Marketplace plans can cost far less if you qualify for premium tax credits, and losing job-based coverage opens a 60-day Special Enrollment Period.
- Do not cancel COBRA on your own outside Open Enrollment and expect to qualify for a new Marketplace plan. Confirm the new plan's start date first.
- If you are 65 or close to it, COBRA does not protect your Medicare Part B enrollment window. Sort out Medicare timing before you elect or drop COBRA.
- Compare the whole package: premium, deductible, out-of-pocket maximum, doctors and prescriptions, not just the monthly bill.
Table of Contents
- What COBRA actually is
- What Marketplace coverage is
- COBRA vs. Marketplace side by side
- Cost: the biggest difference
- Network, drugs and deductibles: compare more than the premium
- The deadlines that matter
- The trap: quitting COBRA early
- If you are 65 or close to it: Medicare changes the question
- Which one fits your situation
- Our perspective
- How we can help
- A simple process to decide
- Frequently asked questions
- Talk to a licensed advisor
- Sources
What COBRA actually is
COBRA is a federal law that requires most group health plans to offer a temporary continuation of coverage after employment ends, as the CMS COBRA job aid explains. You are not getting a special plan. You are staying on the same plan your employer offered, with the same network, the same formulary and the same benefits.
The catch is who pays. While you worked, your employer likely covered a share of the premium. Under COBRA, you can be charged up to 102% of the plan's cost, meaning the employer and employee shares combined plus a 2% administrative fee. Standard COBRA after a termination or reduced hours generally lasts 18 months, with possible extensions in certain circumstances, per the same CMS document.
COBRA also generally applies only to employers that sponsor a group plan and meet the law's size rules, so ask your former employer or plan administrator whether you are eligible and what the exact monthly cost will be.
What Marketplace coverage is
The Marketplace is where you buy an individual or family plan under the Affordable Care Act. In Michigan, you shop through HealthCare.gov. Plans are sold in metal tiers, and the amount you pay depends heavily on your household income and size. Depending on your income, you could qualify for premium tax credits, Medicaid or CHIP, according to CMS guidance.
Here is a point that surprises people: being eligible for COBRA does not reduce your eligibility for Marketplace savings. KFF explains that simply being offered COBRA does not affect your eligibility for premium tax credits or cost-sharing reductions if you enroll in a Marketplace plan. Actually enrolling in COBRA is a different story, and we cover it below.
COBRA vs. Marketplace side by side
| Factor | COBRA | Marketplace plan |
|---|---|---|
| What you get | Your exact former employer plan | A new individual plan you choose |
| Monthly cost | Full premium plus up to 2% fee | Varies by plan and income; subsidies may lower it |
| Financial help | None | Premium tax credits, cost-sharing reductions, Medicaid or CHIP if eligible |
| Network and drugs | Same as before | May differ; check each plan's directory and formulary |
| Deductible progress | Usually continues in the current plan year | Starts at zero with the new plan |
| How long | Generally 18 months, sometimes longer | As long as you keep paying and stay eligible |
| Enrollment window | Election deadline set in your COBRA notice | 60 days after losing coverage, or Open Enrollment |
| Who it fits | Mid-treatment, near your out-of-pocket max, short gap before new job | Lower or moderate income, healthy, planning a longer stretch without employer coverage |
Treat this as a starting framework. Your own numbers decide the winner.
Cost: the biggest difference
COBRA is expensive because nobody is sharing the bill anymore. A plan that cost you $200 a month from your paycheck may cost many times that once the employer portion lands on you. Your COBRA election notice lists the exact amount, so ask for it before you decide.
Marketplace pricing works differently. The premium for a given plan depends on your age, your ZIP code and the plan tier. Your subsidy depends on your income. One reality check for 2026 and beyond: some consumer guides note that the enhanced tax credits introduced during the pandemic years are no longer available in 2026, so subsidies are generally smaller than they were. Run your own estimate on HealthCare.gov rather than relying on a headline number from an earlier year.
How retirees and people with a severance should estimate income
Marketplace savings rest on your estimated household income for the whole calendar year, not only the months after you stopped working. HealthCare.gov's retiree page notes that income earned earlier in the year, and generally withdrawals from an IRA or 401(k), can affect that estimate. So if you worked until June, your wages from January to June count. Severance, unused vacation payouts and retirement account withdrawals can push you over a threshold you thought you were under.
This is why a quick online calculator can mislead. Enter a full-year figure, and consider how any planned withdrawals change it.
Network, drugs and deductibles: compare more than the premium
The cheaper premium is not always the cheaper year. HealthCare.gov's COBRA guidance points to what to weigh. Before choosing, compare these items for each option:
- Provider directory. Are your primary care doctor, specialists and hospital in network? Call the offices, because online directories are not always current.
- Prescription formulary. Look up every regular medication, its tier and its copay or coinsurance.
- Deductible. Under COBRA you usually keep the progress you have made this plan year. A new Marketplace plan starts from zero.
- Out-of-pocket maximum. This is the most you would pay in a year for covered care. It is the number that matters if something serious happens.
- Time left in the plan year. If it is October and you have already met most of your deductible, COBRA for the last few months may be a smart bridge. If it is February, the math is different.
A worked example
Say you leave a job on October 31 and your COBRA notice quotes a monthly premium. You have met your deductible and are close to your out-of-pocket maximum because of a surgery this year. Two months of COBRA keeps that progress alive through December 31. Then you can pick a Marketplace plan during Open Enrollment for January 1. That is a legitimate strategy, and it only works if the timing rules below are respected.
Now reverse it. You are healthy, take no regular medications, and your household income qualifies you for a substantial credit. A Marketplace plan may cover everything you need at a fraction of the COBRA price.
The deadlines that matter
Two clocks run at once, and mixing them up is how people end up uninsured or overpaying.
Marketplace Special Enrollment Period. Losing job-based coverage generally gives you 60 days to enroll in a Marketplace plan, as laid out in HealthCare.gov's special enrollment guidance. This applies even when COBRA is offered. You can also generally apply before you lose coverage, so the new plan starts the day after the old one ends.
COBRA election window. Your COBRA notice sets a deadline to elect coverage. Read the notice carefully and keep it. You can compare COBRA with Marketplace plans before deciding.
Open Enrollment. For 2027 plans in Michigan, open enrollment runs from November 1, 2026 through January 15, 2027, and you must select a plan by December 15, 2026 for coverage to start January 1, 2027. During Open Enrollment, anyone can switch from COBRA to a Marketplace plan.
For more on how Michigan shoppers should approach the window, see our post on Michigan Marketplace plans and enrolling by address. If you want to understand special enrollment rules more broadly, our Special Enrollment Period articles cover the topic.
The trap: quitting COBRA early
This is the most expensive mistake we see described. If you choose COBRA and later decide to drop it mid-year, simply ending it voluntarily outside Open Enrollment normally does not create a new Special Enrollment Period. Per HealthCare.gov, outside Open Enrollment you can generally switch when COBRA expires, becomes unavailable, your former employer stops contributing, or you have another qualifying life event.
In plain terms, if you elect COBRA you may be committed until Open Enrollment unless one of those events happens. If you are unsure which route you want, the safer approach is often to enroll in the Marketplace within your 60-day window rather than assume you can change your mind later.
A second practical rule: during Open Enrollment, choose your Marketplace plan first and do not end COBRA until you have confirmed the new coverage's effective date. A gap of even a few days can leave you exposed to a large bill.
What about a COBRA payment grace period?
COBRA premiums have due dates, and missing them can end your coverage. If you are electing COBRA as a short bridge, set up reminders, and keep proof of every payment.
If you are 65 or close to it: Medicare changes the question
For people nearing retirement, the COBRA-versus-Marketplace question can be the wrong question. Medicare may be the answer.
Medicare.gov says COBRA does not extend the limited period to enroll in Part B. COBRA is not coverage based on current employment, so waiting for COBRA to run out can create a Part B gap or late-enrollment consequences. If you are 65 or approaching 65 and leaving a job, check your Medicare timing before you elect or drop COBRA.
There is a second issue. When you have Medicare because you are 65 or older and also have COBRA, Medicare generally pays first, and COBRA may pay only a limited share. Medicare.gov advises checking with the COBRA plan about what it actually pays. Paying a high COBRA premium for coverage that mostly sits behind Medicare is a poor use of money for many people.
A few related reads from our blog:
- Medicare at 65: avoid Part D penalties and check this year's costs.
- Our Medicare Special Enrollment Period checklist for people leaving employer coverage.
- Health insurance at 62, including how to protect subsidies during the gap before Medicare.
If you are retiring before 65 without coverage, the Marketplace is typically the bridge. HealthCare.gov's retiree page covers what to consider if you have retiree coverage as well.
Which one fits your situation
These are rules of thumb, not guarantees. Always price both.
COBRA tends to fit when:
- You are in the middle of treatment and your doctors are only in the old plan's network.
- You have already met much of your deductible this year.
- You expect new employer coverage within a couple of months.
- Your income is too high for meaningful subsidies and the old plan is clearly better.
The Marketplace tends to fit when:
- Your household income, counted for the full year, qualifies you for a credit.
- You are generally healthy and your doctors participate in several Marketplace networks.
- You need coverage for more than a few months.
- You want to keep the option of changing plans each Open Enrollment.
Neither may be right when:
- You are on the cusp of Medicare. Look at Medicare Part B, Medicare Advantage or Medicare Supplement first.
- Your spouse has an employer plan you can join. Losing coverage generally opens a special enrollment window there too, and it is often cheaper than COBRA.
Our perspective
We talk with people in this position every week, and the pattern is consistent. They are stressed, they have a stack of paperwork, and they are afraid of choosing wrong. The first thing we tell them is that the monthly premium is only one line of the decision.
We start with three questions. Who are your doctors? What medications do you take? What will your income really be this year? Those answers usually narrow the choice quickly. Then we compare the COBRA quote against actual Marketplace options with your income entered correctly, including any severance or retirement withdrawals.
Our advisors are licensed with multiple carriers and our guidance costs you nothing, so our recommendation does not depend on pushing one company's plan. If COBRA is the better bridge, we will say so. If the Marketplace saves you thousands, we will show you the numbers. And if you are near 65, we look at Medicare timing before anything else, because that is the mistake that is hardest to undo.
We also stay with clients after enrollment. Needs change when a new job starts, when you retire, or when Medicare begins, and coverage should change with them.
— Brian
How we can help
Platinum Benefit Advisors helps Michigan individuals and families compare COBRA, Marketplace plans and Medicare options, then handles enrollment support. If you are turning 65, our Medicare guidance page explains how we help, and our services page lists everything we offer, from health and life insurance to group coverage. You can also start at pbabiz.com.
A simple process to decide
- Find your dates. Note the date your coverage ends, the COBRA election deadline in your notice, and the end of your 60-day Special Enrollment Period.
- Get the COBRA quote. Ask for the exact monthly premium, and ask what your deductible and out-of-pocket progress is for the year.
- Estimate full-year income. Include wages already earned, severance, and any planned retirement withdrawals.
- Price Marketplace plans. Use HealthCare.gov with your Michigan ZIP code, and check each plan's doctors and drugs.
- Compare total cost. Add premium plus likely out-of-pocket costs for a realistic year, and a bad-year scenario.
- Check Medicare. If you are 65 or close, confirm your Part B and Part D timing first.
- Confirm start dates. Never cancel one plan until the other has a confirmed effective date.
Frequently asked questions
Is it better to get COBRA or Marketplace insurance?
Neither wins every time. COBRA keeps your exact plan but you pay the full premium plus up to 2%, while Marketplace plans can cost less when you qualify for subsidies. Price both with your real income, and compare doctors, drugs and deductibles before you choose.
Can I switch from COBRA to the Marketplace later?
Yes, but not always when you want. During Open Enrollment you can pick a Marketplace plan and end COBRA when the new coverage starts. Outside Open Enrollment, quitting COBRA voluntarily normally does not open a Special Enrollment Period, though COBRA running out or ending can.
Does being offered COBRA hurt my Marketplace subsidy?
No. According to KFF, simply being eligible for COBRA does not affect your eligibility for premium tax credits or cost-sharing reductions. Enrolling in COBRA is different, because while you are on it you generally cannot use a new Special Enrollment Period just by dropping it.
I am 65. Should I take COBRA?
Be careful. COBRA does not extend your Part B enrollment window, and Medicare generally pays first if you have Medicare because of your age. Talk to a licensed Medicare advisor or Social Security before electing COBRA so you do not create a coverage gap or a late-enrollment penalty.
How long do I have to enroll in a Marketplace plan after losing my job?
Generally 60 days from the date you lose job-based coverage. You can often apply earlier so the new plan starts right after your old one ends. Keep your termination or coverage-end letter as proof.
Talk to a licensed advisor
Have questions? We have answers! Contact us to schedule a no-obligation meeting.
Contact Platinum Benefit Advisors
Call or text 616-221-4616
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Sources
- Understanding COBRA Job Aid, CMS
- COBRA coverage and the Marketplace, CMS
- Does COBRA eligibility affect premium tax credits? KFF
- Health coverage for retirees, HealthCare.gov
- COBRA coverage when you're unemployed, HealthCare.gov
- Getting health coverage outside Open Enrollment, HealthCare.gov
- Health Insurance Open Enrollment, Michigan DIFS
- Working past 65, Medicare.gov
- Who pays first? Medicare.gov