COBRA or the marketplace?
When you leave a job, you'll get a packet explaining your right to continue the employer's health plan. That's COBRA. It's a genuine option and sometimes the correct one — but the price is a shock, and the packet doesn't mention the alternative.
Why the number is so surprising
Most people have never seen what their health coverage actually costs. They've seen the payroll deduction, which is their share of it.
Under COBRA you pay the full premium — your old share plus your employer's share — plus a small administrative amount. Nothing about the coverage changed. What changed is that you can now see the whole price for the first time.
When COBRA is the right call
There are several situations where it clearly wins:
- You're partway through a deductible or out-of-pocket maximum. Starting a new plan resets that to zero. If you've already met most of it, finishing the year on the same plan can be worth the higher premium outright.
- You're mid-treatment. Continuity of care with the same specialists, under the same authorisations, is worth a great deal and is hard to price.
- You only need to bridge a short gap. A couple of months to Medicare or to a new job's coverage is a different calculation from eighteen.
- Your doctors aren't available any other way. If the people you rely on are only in that network, that can settle it.
When the marketplace usually wins
For most people retiring before 65, a marketplace plan with a subsidy costs less — often substantially. The reason is simply that COBRA has no subsidy attached to it at all, while marketplace coverage does, and what that subsidy is worth depends on income that has usually just dropped.
You also get to choose the level of coverage rather than inheriting whatever your employer picked.
The timing trap worth knowing about
Losing job coverage opens a special enrollment period to buy a marketplace plan. That window is limited.
Here's the part that catches people: electing COBRA doesn't pause that window. If you take COBRA, let the window close, and then decide COBRA is too expensive, you may be waiting for the next open enrollment period to switch — potentially months.
Voluntarily dropping COBRA later generally doesn't reopen a special enrollment period either. Running out of it does, but choosing to stop usually doesn't.
What to do
Get three numbers before you decide anything: what COBRA would cost per month, what a comparable marketplace plan would cost after any subsidy, and how much of your deductible you've already met this year. With those three, the answer is usually obvious within a few minutes.
If you're within a year of 65, add a fourth: the date Medicare starts. Bridging six months is a different problem from covering three years.