Lost Your Job? COBRA vs a Marketplace Plan, Compared
COBRA keeps your old plan at up to 102% of its full cost; a Marketplace plan can cost less with a tax credit. Deadlines, 2026 and 2027 rules and a decision guide.
When you lose a job, you usually have two ways to stay insured: keep your employer's plan through COBRA, or buy a new plan on the Health Insurance Marketplace (HealthCare.gov or your state's exchange). COBRA keeps the same plan, doctors and deductible, but it can be the more expensive choice, because the plan can bill you for its entire cost plus 2%. A Marketplace plan means starting a new plan, but it can cost much less if your income qualifies for a premium tax credit.
The deadlines for both run at the same time, roughly 60 days, and one wrong move can keep you out of a Marketplace plan until the next open enrollment. Here is how each option works under the federal rules for 2026, what changes for 2027, and where Medicaid fits.
Key takeaways
- Losing job-based coverage opens a 60-day Marketplace special enrollment period, and you can report the loss up to 60 days before your coverage ends.
- Under federal COBRA you get at least 60 days to elect, coverage usually lasts up to 18 months after a job loss, and the premium can be up to 102% of the plan's total cost.
- Turning down COBRA does not cost you the premium tax credit. Only months you are actually enrolled in COBRA do.
- Dropping COBRA or stopping payments on your own does not open a new special enrollment period. Open enrollment for 2027 coverage runs November 1, 2026 to January 15, 2027 on HealthCare.gov.
- For 2026 and 2027, the premium tax credit is generally limited to household incomes from 100% to 400% of the federal poverty level. For one person buying 2026 coverage in the 48 contiguous states or DC, 400% is $62,600.
- Medicaid and CHIP take applications all year. HealthCare.gov advises waiting for a final Medicaid decision before ending COBRA.
How COBRA works
COBRA is a federal law that lets you, and a spouse or children on your plan, keep the group health coverage you had through work for a limited time. Losing your job qualifies unless you were fired for gross misconduct, and so does a cut in hours. Federal COBRA reaches a private employer whose workforce was 20 or more on over 50% of its usual business days in the prior calendar year, and it also reaches state and local government plans. It does not cover federal government or church plans. Many states have "mini-COBRA" laws for smaller employers.
On COBRA you keep the same benefits that current employees in your old job category still have, so your network, drug list and deductible do not change. What changes is who pays. The plan can charge you up to 102% of the total cost of coverage, including the part your employer used to pay. Some employers agree in a severance package to pay some or all of the COBRA premium for a period, so read any separation paperwork closely.
The COBRA timeline
These are the federal rules for 2026. The time you get to elect and to pay is a minimum, and your plan may allow longer; the employer and plan deadlines are the latest they can act. Your election notice gives your exact dates.
| Step | Federal deadline |
|---|---|
| Employer tells the plan you lost your job | Within 30 days |
| Plan sends you an election notice | Within 14 days of hearing from the employer; if the employer is also the plan administrator, no later than 44 days after the job loss |
| You decide whether to elect | At least 60 days from the later of the notice date or the date coverage would end |
| First premium payment | At least 45 days after you elect |
| Later monthly payments | A grace period of at least 30 days each month |
| How long it lasts | Up to 18 months after a job loss or cut in hours; up to 29 months with a disability extension; up to 36 months for a spouse or child after certain family events |
If you elect within the window, coverage is backdated to the day your job-based plan ended, so your first payment may cover several months. COBRA can end early if a payment is late or short, if the employer drops group health coverage for all its workers, or if, after electing it, you join another group plan or become entitled to Medicare.
How a Marketplace plan works after a job loss
Losing health coverage from a job counts as a qualifying life event. You have 60 days after the loss to pick a Marketplace plan, and CMS says you can also report the loss as early as 60 days before your coverage ends. On the federal platform, timing sets your start date:
- Pick a plan before your old coverage ends, and the new plan starts on the first day of the month after your last day of coverage.
- Pick a plan after the old coverage has ended, and it starts on the first day of the month after you pick it.
For 2026, the federal platform asks people who enroll after a loss of coverage to prove the loss before they can use the new plan, and you have 30 days after choosing a plan to send the documents. A federal court has put on hold a 2027 rule that would have required checks on at least 75% of new special enrollment sign-ups, but the check for loss of coverage continues. State-run exchanges set their own procedures.
The premium tax credit
The premium tax credit lowers your monthly premium, and it is based on household income for the whole calendar year. HealthCare.gov asks you to count income already received this year plus what you expect for the rest of it, and unemployment benefits count. Wages you earned before the layoff stay in the total.
The temporary enhanced credits expired after 2025. For 2026 and 2027, the credit is generally available only when household income is from 100% to 400% of the federal poverty level (FPL). Marketplace savings use the prior year's poverty guidelines: $15,650 for one person for 2026 coverage, and $15,960 for 2027 coverage. Both figures are for the 48 contiguous states and DC; Alaska and Hawaii are higher. A House-passed bill to extend the enhanced credits, H.R. 1834, had not become law as of October 13, 2026.
Within that range, you are expected to put a set share of your income toward the second-lowest-cost Silver plan in your area. For 2026 the share runs from 2.10% at the lowest incomes to 9.96% for incomes from 300% to 400% FPL; for 2027 it runs from 2.15% to 10.22%. Your monthly credit is that Silver plan's premium minus your expected monthly contribution. You can use it on a plan at any metal level, but it cannot be more than that plan's premium.
Two cautions. From tax year 2026 there is no cap on repaying excess advance credits, so if a new job raises your income later in the year, report the change promptly. And declining COBRA does not cost you the credit: IRS rules treat you as eligible for a former employer's coverage only in months you actually enroll in it. Our guide to how premium tax credits work in 2026 and 2027 covers reconciliation.
Comparing the cost: a worked example
Example: Dana is single and loses a job at the end of September 2026. The employer plan's total cost is $700 a month for self-only coverage, and Dana estimates 2026 household income at $55,000, counting salary already earned plus unemployment benefits (both illustrative). On COBRA, Dana can be charged up to 102% of $700, or $714 a month. On the Marketplace, $55,000 is about 351% of the $15,650 guideline used for 2026 coverage, which falls in the flat 9.96% band. The expected contribution is 9.96% of $55,000, or $5,478 a year ($456.50 a month). If the second-lowest-cost Silver plan costs $650 a month (illustrative), the credit is $650 minus $456.50, or $193.50 a month. That Silver plan would cost Dana $456.50 a month, and a Bronze plan priced at $480 would cost $286.50.
On premiums alone, the Marketplace saves Dana $257.50 to $427.50 a month. But if Dana has already paid most of this year's deductible, staying on COBRA through December keeps that progress, because it is the same plan. A Marketplace plan has its own deductible, so Dana would need to ask the new insurer whether anything paid under the old plan counts toward it. A new plan may also use a different network and drug list.
For 2027 the numbers shift: the $15,960 guideline and the 10.22% top rate apply. The same $55,000 income is about 345% FPL, still in the top band, so the expected contribution becomes $5,621 a year, about $468.42 a month.
The trap: leaving COBRA in the middle of the year
Once you are on COBRA, ending it yourself or simply not paying the premium does not count as losing coverage for Marketplace purposes. Do either outside open enrollment and you could be uninsured until the next one. A new 60-day window does open when COBRA ends for a reason outside your control, such as using up its maximum length, or when a former employer that was paying part of the premium stops paying. Our guide to special enrollment periods and qualifying life events lists the other events that count.
Open enrollment is the exception that matters now: during it, HealthCare.gov lets anyone on COBRA move to a Marketplace plan, whatever the reason. For 2027 coverage, enroll by December 15, 2026 and pay the first premium for a January 1, 2027 start; enrolling December 16 to January 15 gives a February 1 start. Some state exchanges set different dates. A switch leaves no gap when COBRA runs through December 31 and the new plan starts January 1. The 2027 open enrollment checklist walks through the steps.
Medicaid and CHIP
If your income has dropped sharply, check Medicaid first. Medicaid and the Children's Health Insurance Program (CHIP) accept applications all year, through the Marketplace application or your state Medicaid agency, and coverage can start right away if you qualify. In states that expanded Medicaid, adults can qualify on income alone, with a limit of 138% of the poverty level in most of them and a different limit in some. In states that did not expand, some adults with very low incomes fall into a gap: too much income for their state's Medicaid, but below the 100% FPL floor for Marketplace tax credits.
A 2025 federal law adds a work requirement for many adults in the Medicaid expansion group. Under a CMS interim final rule issued June 1, 2026, states must start it no later than January 1, 2027, and may start earlier. Non-pregnant adults aged 19 to 64 in that group must show 80 hours a month of work, community service, a work program or at least half-time school, or monthly income of at least 80 times the federal minimum wage ($580 a month in 2026). Parents and caretakers of a child aged 13 or under are among those exempt. A coalition of states has sued over parts of the rule. On July 29, 2026 a federal court in Massachusetts refused to block it while the case goes on, and the case was still pending in September 2026. Check your state Medicaid agency for its current rules.
How to decide
Treat these as starting points and check the real prices.
| If this describes you | The option that usually fits |
|---|---|
| Income at or below 138% FPL in a state that expanded Medicaid | Medicaid |
| Income qualifies for a premium tax credit and you have paid little toward this year's deductible | A Marketplace plan |
| You have met most of this year's deductible, or you are mid-treatment with doctors who may not be in Marketplace networks | COBRA, at least until the year ends |
| Your former employer is paying part of the COBRA premium | Compare the subsidized COBRA price with the Marketplace price |
| 2026 household income above 400% FPL ($62,600 for one person) | No 2026 tax credit, so compare full prices |
| Coverage from a new job starts within a few weeks | COBRA can fill the gap: the election window is at least 60 days, and coverage is backdated to the day the old plan ended, as long as you pay the premiums for those months |
Frequently asked questions
After electing COBRA, can you still move to a Marketplace plan?
Yes. Electing COBRA does not stop you from joining a Marketplace plan later if you qualify for a special enrollment period, such as when your COBRA runs out, and anyone can switch during open enrollment.
Do unemployment benefits count as income for Marketplace savings?
Yes. HealthCare.gov counts unemployment benefits, along with income you received earlier in the year, when you estimate your household income.
How long does COBRA last?
Usually up to 18 months after a job loss. It can reach 29 months if the Social Security Administration finds you were disabled before the 60th day of COBRA coverage, the disability lasts through the first 18 months, and you notify the plan. A spouse or child can get up to 36 months after events such as the employee's death or a divorce.
What if your employer had fewer than 20 workers?
Federal COBRA generally does not apply, but your state may have a mini-COBRA law. Either way, losing job-based coverage still gives you the 60-day Marketplace special enrollment period.
Sources
- A Worker's Guide to Health Benefits Under COBRA (U.S. Department of Labor)
- FAQs on COBRA Continuation Health Coverage for Workers (U.S. Department of Labor)
- COBRA coverage when you're unemployed (HealthCare.gov)
- Marketplace coverage when you're unemployed (HealthCare.gov)
- Special Enrollment Periods, SEP Verification, and Complex Case Scenarios, September 2026 (Centers for Medicare & Medicaid Services)
- Publication 974 (2025), Premium Tax Credit (Internal Revenue Service)
- Revenue Procedure 2025-25: 2026 applicable percentage table (Internal Revenue Service)
- Medicaid expansion and what it means for you (HealthCare.gov)