Losing a job usually means losing health insurance with it, and the paperwork arrives at the worst possible time. Within days you will get a COBRA election notice quoting a premium that looks nothing like what came out of your paycheck. Meanwhile a clock starts on your right to buy a marketplace plan, and if you miss it, you may be stuck without coverage until next open enrollment.
This guide lays out the deadlines that matter, what COBRA really costs once your employer stops paying its share, how a subsidized marketplace plan compares now that the enhanced subsidies have expired, and the handful of situations where COBRA is still the better buy. If you decide to go the marketplace route, our rankings of the best health insurance companies of 2026 will help you narrow down carriers in your state.
Your first 60 days: the clock that matters
Losing job-based coverage is a qualifying life event, which opens a special enrollment period (SEP) on the marketplace. You get 60 days from the date your coverage ends to enroll in a plan, and HealthCare.gov also lets you apply up to 60 days before the loss so you can line up coverage in advance. The full rules are on HealthCare.gov’s special enrollment page.
A few details trip people up:
- The 60 days run from the day your coverage ends, not your last day of work. Many employers keep coverage through the end of the month you leave. Confirm the exact date in writing.
- You may have to prove it. The marketplace can ask for documents showing loss of coverage, such as a letter from your employer or the COBRA notice, before your new plan takes effect.
- Medicaid and CHIP have no deadline. Both enroll year-round, and the marketplace application screens you for them automatically based on your income. If you lose Medicaid or CHIP later, that opens a longer 90-day SEP.
- Losing a short-term plan does not count. Only loss of minimum essential coverage qualifies.
The 60-day window is also your COBRA election window. That is not a coincidence: the point is to compare the two before you commit to either.
How COBRA works
COBRA is the federal law that lets you keep your former employer’s group plan after you leave. It applies to private employers with 20 or more employees and to state and local governments. If you lost your job or had your hours cut, you and your covered dependents can continue for up to 18 months. Dependents who lose coverage because of divorce, the employee’s death or the employee becoming entitled to Medicare can continue for up to 36 months. The Department of Labor’s COBRA FAQ for workers covers the eligibility rules in detail.
The timeline works like this:
- Your plan sends an election notice after your coverage ends.
- You have 60 days from the later of the notice date or the coverage-loss date to elect.
- After electing, you have 45 days to make your first payment, which covers coverage back to the date you lost it.
- Each later monthly payment has a 30-day grace period.
That structure creates a useful option. COBRA is retroactive: if you elect on day 59 and pay on day 104, you are covered for the whole gap. Some people deliberately wait, letting COBRA lapse if nothing happens and electing if something does. It is legal but nerve-wracking, and it only works if you are certain you will not need the marketplace SEP instead.
If you worked for a smaller employer, COBRA may not apply, though many states have their own continuation laws for small-group plans. Check with your state insurance department, and treat the marketplace SEP as your primary route.
What COBRA really costs
The shock in the COBRA notice is the price. While you were employed, your company paid most of the premium. Under COBRA you pay the full premium yourself plus an administrative fee of up to 2 percent, or 102 percent of the total cost. During a disability extension it can rise to 150 percent.
The KFF 2025 Employer Health Benefits Survey puts the average employer plan premium at $9,325 a year for single coverage and $26,993 for family coverage. Workers paid an average of $1,440 and $6,850 of those amounts. Apply the COBRA math and the picture changes fast:
- Single coverage: $9,325 x 1.02 = about $9,512 a year, or roughly $793 a month, up from about $120 a month while employed.
- Family coverage: $26,993 x 1.02 = about $27,533 a year, or roughly $2,294 a month, up from about $571 a month while employed.
Your election notice will state your exact numbers, but for most laid-off workers COBRA means paying four to six times what they were used to, right as their income drops.
The marketplace alternative
A marketplace plan is the main competitor to COBRA, and after a layoff it has one enormous advantage: premium tax credits are based on your estimated income for the coverage year, not your prior salary. A high earner who is laid off in June and expects modest income for the rest of the year can qualify for a substantial credit, or in some cases for Medicaid. HealthCare.gov’s page for people who are unemployed explains how the estimate works.
The rules in force for 2026 and 2027 coverage are the original ACA rules, because the enhanced credits passed in 2021 expired on December 31, 2025 and have not been restored as of this writing. That means:
- Credits are available between 100 and 400 percent of the federal poverty level. Above 400 percent you get nothing, the so-called subsidy cliff. For 2026 coverage that line is $62,600 for one person and $128,600 for a family of four.
- Your expected contribution toward the benchmark Silver plan ranges from 2.10 percent of income at the bottom of the scale to 9.96 percent between 300 and 400 percent of poverty, per IRS Revenue Procedure 2025-25.
- Below 250 percent of poverty, Silver plans carry cost-sharing reductions that raise the share the plan pays to 73, 87 or 94 percent.
- Repayment caps are gone from tax year 2026, so if you underestimate your income you repay the full excess credit. Update your estimate the moment you land a new job.
One caution for late-2026 layoffs: open enrollment for 2027 plans runs November 1, 2026 through January 15, 2027, and several carriers are leaving after 2026, including Cigna in all 11 of its states and Molina in most of its 14. If you enroll in a 2026 plan through an SEP this fall, you will need to shop again during open enrollment and may need a new carrier for January.
COBRA vs marketplace side by side
| Feature | COBRA | Marketplace plan |
|---|---|---|
| Who qualifies | Employees of companies with 20+ workers (and state and local governments) | Anyone who loses job-based coverage |
| Deadline to sign up | 60 days from election notice or coverage loss | 60 days before or after coverage loss |
| Monthly cost | 102 percent of the full group premium | Full premium minus any tax credit based on estimated income |
| Subsidies | None (unless a former employer chooses to pay) | Premium tax credits from 100 to 400 percent of poverty; cost-sharing reductions below 250 percent |
| Plan and network | Same plan, same doctors, same deductible progress | New plan; deductible starts at zero; networks often narrower |
| How long it lasts | 18 months (36 for some dependents) | Through December 31, then renew at open enrollment |
| Switching later | Can move to the marketplace at open enrollment or when COBRA ends, but not by dropping it voluntarily | Can change plans at open enrollment or with a new qualifying event |
Worked example: a family of four after a layoff
Consider a household of four where one parent is laid off in the spring. The family had the average employer family plan, so the COBRA quote is about $2,294 a month.
Adding up the parent’s salary through the layoff, unemployment benefits and the other spouse’s part-time income, the family estimates $110,000 of income for the year. On 2026 coverage that is about 342 percent of the poverty level ($32,150 for a family of four), which places them in the 300 to 400 percent band. Their expected contribution toward the benchmark Silver plan is 9.96 percent of income: $10,956 a year, or about $913 a month. If the benchmark plan in their county costs more than that, the tax credit covers the difference, and they can apply the same credit to a cheaper Bronze plan or a pricier Gold one.
At roughly $913 a month against $2,294 for COBRA, the marketplace saves this family something on the order of $1,380 a month. Even if the new plan has a bigger deductible and a narrower network, that gap is hard to ignore. And if the layoff stretches on and income drops toward $80,000, the family falls under 250 percent of poverty, unlocks cost-sharing reductions on Silver, and the marketplace wins by an even wider margin.
Flip the numbers, though. If the other spouse earns enough that the household stays above $128,600, the credit is zero, and the marketplace plan costs full price. At that point COBRA and the marketplace are competing on sticker price and plan quality alone. Our guide to ACA subsidies in 2026 has the full income table.
When COBRA still makes sense
The marketplace wins on price for most laid-off workers, but COBRA is the right call in a few specific situations:
- You have already met your deductible. If you are laid off in October after a year of heavy medical bills, a new marketplace plan resets your deductible to zero. COBRA keeps your progress until December 31.
- You are mid-treatment. Pregnancy, chemotherapy, a scheduled surgery or ongoing mental health care with a provider you trust are all reasons to keep the network you are in, at least until open enrollment.
- Your household income is above 400 percent of poverty. With no tax credit, a marketplace plan may cost as much as COBRA with a worse network.
- The gap is short. If you have a signed offer starting next month, the retroactive election window means you may never need to pay for COBRA at all.
- Your employer is paying part of it. Some severance packages cover COBRA premiums for a few months. Take it, and note that if that subsidy ends, you get a fresh marketplace SEP.
If none of those apply, the marketplace is usually the better deal. Use the plan-comparison tools to check that your doctors are in network and read our step-by-step guide on how to choose a health insurance plan before you enroll.
Traps to avoid
A few mistakes after a layoff can leave you uninsured or facing a large bill:
- Electing COBRA, then dropping it. Voluntarily ending COBRA, or missing a payment, is not a qualifying event. You will wait until open enrollment for a marketplace plan. Decide once, in the 60-day window, using HealthCare.gov’s COBRA guidance.
- Letting the 60 days slip. Between severance talks and the job search, it is easy to lose track. Put the deadline on your calendar the day you get your notice.
- Bridging with a short-term plan. Short-term policies can exclude pre-existing conditions and skip essential benefits, are limited to 4 months total under the current federal rule (although enforcement has been paused), and are banned in roughly a dozen states. Losing one does not open a new SEP. See our short-term health insurance guide before you consider one.
- Forgetting to update your income. Once you are hired again, report the change immediately. With repayment caps gone, an outdated estimate turns into a tax bill next spring.
- Skipping Medicaid screening. If your projected income for the year is low, you may qualify for Medicaid at no premium. Let the marketplace application check.
Bottom line
COBRA keeps everything the same, at a price that is usually four to six times what you paid on the job. A marketplace plan changes your network and resets your deductible, but for most laid-off workers with household income under 400 percent of poverty, premium tax credits make it dramatically cheaper. The math turns on your estimated income for the rest of the year and on where you are in your deductible, and you have 60 days to do it.
Run both quotes in the first week, not the last one, and pick the option you can actually afford for as long as the job search takes. When you are ready to compare marketplace carriers, start with our list of the best health insurance companies of 2026.