What is COBRA insurance and how does it work?

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue your employer-sponsored health insurance after leaving a job. You pay the full premium (what you and your employer paid) plus up to a 2% administrative fee. COBRA typically lasts 18 months but can extend to 36 months in certain circumstances.

Is COBRA more expensive than marketplace insurance?

COBRA is often more expensive than marketplace (ACA) insurance, especially if you qualify for subsidies based on your income. Marketplace plans may offer premium tax credits that significantly reduce your monthly cost. However, COBRA may be worth it if you have ongoing care with specific doctors or have already met your deductible.

How long do I have to decide on COBRA?

You have 60 days from the date you lose coverage or receive your COBRA election notice (whichever is later) to elect COBRA. If you elect COBRA, you'll need to pay all back premiums to your coverage start date. You can use this time to compare COBRA costs with marketplace insurance options.

When should I choose COBRA over marketplace insurance?

Choose COBRA if: 1) You've met your deductible and expect high medical costs, 2) You're in the middle of treatment with specific providers, 3) You have a serious health condition and need continuity of care, 4) The marketplace premium is similar or higher than COBRA, 5) You only need coverage for 1-2 months before new employer coverage starts.

Can I switch from COBRA to marketplace insurance?

Yes, losing employer coverage (including ending COBRA) is a qualifying life event that allows you to enroll in marketplace insurance outside the open enrollment period. You have 60 days from losing coverage to enroll. You cannot switch mid-month, so plan your transition carefully.

What happens if I don't pay COBRA on time?

You have a 30-day grace period to pay COBRA premiums after the due date. If you don't pay within this grace period, your coverage will be terminated retroactively to the last day you paid for. You won't be able to reinstate COBRA coverage once terminated for non-payment.

Does COBRA cover pre-existing conditions?

Yes, COBRA continues your existing employer coverage, so all pre-existing conditions remain covered with no waiting period. This is one advantage of COBRA - you maintain the same coverage, network, deductibles already met, and out-of-pocket maximum progress.

Can I get subsidies for COBRA insurance?

Generally no, COBRA premiums are not eligible for ACA marketplace subsidies. However, the American Rescue Plan provided temporary COBRA subsidies in 2021. Marketplace insurance may offer premium tax credits based on your income, which is why marketplace plans are often more affordable than COBRA.

What's the difference between COBRA and marketplace insurance?

COBRA continues your exact employer plan with the same doctors, network, deductibles, and benefits. Marketplace insurance is a new plan with potentially different networks, deductibles, and coverage. COBRA is usually more expensive but offers continuity. Marketplace plans may be cheaper, especially with subsidies, but require starting over with new deductibles.

COBRA Cost Calculator | Compare COBRA vs Marketplace Insurance

Q: How much does COBRA cost?

COBRA costs the full premium your employer was paying plus your contribution, plus up to 2% administration fee. This is typically much more expensive than your previous employee contribution. For example, if your employer paid $500/month and you paid $200/month, COBRA would cost around $714/month ($700 + 2% fee).

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Understanding COBRA Insurance Costs

When you lose your job, one of the first things you'll hear about is COBRA—and then you'll see the price tag. Most people are shocked to find out they'll be paying 3-5 times what they used to pay as an employee. This calculator helps you figure out if COBRA is actually worth it, or if you'd save money by going with a marketplace plan instead.

How Much Does COBRA Cost?

COBRA costs include the full premium—what you paid plus what your employer was paying—plus up to a 2% administrative fee. So if you were paying $200/month and your employer was covering $500/month, your COBRA bill will be around $714/month. That's why people often say "how expensive is COBRA"—because it really is. The number that shows up on your paycheck doesn't reflect what health insurance actually costs.

COBRA vs Marketplace Insurance

Here's where it gets interesting. Marketplace insurance (ACA plans) often costs less than COBRA, especially if your income qualifies you for subsidies. Those premium tax credits can drop your monthly payment significantly. This calculator compares both options side-by-side so you can see the real numbers—COBRA's full cost versus what you'd actually pay for marketplace coverage after subsidies.

When Is COBRA Worth It?

COBRA makes sense in a few specific situations. If you've already met your deductible and have upcoming medical expenses, switching to a new plan means starting over at zero. If you're in the middle of cancer treatment or seeing a specialist you trust, COBRA lets you keep those same doctors and that continuity of care. And if you only need coverage for a month or two before your next job's insurance kicks in, paying the higher COBRA premium might be simpler than dealing with a marketplace plan.

The math isn't always obvious, which is why we built this calculator. Plug in your numbers and you'll see exactly what each option will cost you over the time period you need coverage. Sometimes COBRA wins. Often, the marketplace is cheaper. Either way, you'll know which path saves you the most money.

Frequently Asked Questions

Common questions about COBRA insurance and costs