COBRA or the Marketplace? How to Decide

The short answer: the choice usually turns on one question — whether you qualify for a premium tax credit on the Marketplace. And the rule that decides it is the opposite of what most people assume. Being offered COBRA does not disqualify you from the credit. Enrolling in it does.

What you are actually choosing between

COBRA is not a new plan. It is permission to stay on the exact plan you already had, with the same network, the same drug list and the same deductible progress — except that you now pay the whole premium yourself, including the share your employer used to cover. That is why the number on the election notice is often startling. Nothing about the coverage got worse; you are simply seeing its real price for the first time.

A Marketplace plan is a different plan, with a different network and its own deductible starting at zero. What it may come with is a premium tax credit, which can bring the monthly cost down substantially — sometimes below what you were paying as an employee.

So the comparison is rarely “which is cheaper” in the abstract. It is: what does each actually cost you, given your income, your doctors, and how much of this year’s deductible you have already spent.

The rule most people get backwards

Here is where the common assumption goes wrong. If you are working and your employer offers affordable coverage, that offer generally does disqualify you from premium tax credits, whether you take it or not.

Coverage from a former employer does not work that way. The IRS is explicit that if your coverage comes from a former employer — COBRA or retiree coverage — you may decline it and still qualify for the credit, even if it would have been considered affordable. The offer is not the disqualifier.

This matters because a great many people look at a COBRA notice, assume it closes the door on subsidised coverage, and never price the alternative. It does not close the door. It is worth actually checking what a Marketplace plan would cost you before you decide.

The move that can cost you the credit

There is a trap in the other direction, and it catches people who are trying to be careful.

Electing COBRA as a short-term bridge — “just for a couple of months while I sort this out” — and then dropping it is the one sequence that can forfeit the credit. Declining COBRA leaves you eligible. Enrolling in it and then voluntarily dropping it is treated differently, and dropping coverage voluntarily does not by itself open a Marketplace enrollment window.

If there is any chance you qualify for a credit, price the Marketplace before you elect, not after. You generally have 60 days from the election notice to decide, which is enough time to do it properly.

When COBRA is the better answer

COBRA gets a bad reputation because of the sticker price, but there are situations where it is plainly the right call.

You are in the middle of treatment. Surgery scheduled, a course of therapy underway, an oncologist you are not going to change. Continuity is worth real money, and a new plan means a new network and a new deductible.

You have already met most of your deductible. Switching in October resets that to zero. Late in the plan year, staying put is often cheaper overall even at full premium.

Your income is clearly above the credit cutoff. Above 400% of the federal poverty level the premium tax credit is zero rather than reduced — there is no taper. If you are comfortably above that line, the subsidy consideration simply does not apply, and COBRA becomes a fallback you can weigh purely on coverage and price.

The gap is short. If a new employer’s plan starts in six weeks, the arithmetic is different from bridging fourteen months.

When the Marketplace usually wins

If your income for the year has dropped — which it often has, since you just lost a job — you may qualify for more help than you expect. The credit is based on this year’s expected income, not last year’s. People routinely estimate using the salary they no longer have and conclude they do not qualify.

The thresholds move every January and depend on household size, so there is no single number worth memorising. Georgia Access, the state’s own marketplace, will price it against your actual household — Georgia left healthcare.gov behind in 2025, so that is the one to use. Our page on the subsidy cliff explains why the cutoff behaves the way it does.

If you are anywhere near 65

A different and much less forgiving clock applies, and it is the mistake in this whole area that costs the most.

Medicare does not count COBRA as coverage through current employment. Your window to take Part B without a lifelong penalty closes eight months after your group coverage ends or your employment ends, whichever happens first — and electing COBRA does not extend it. Someone who takes COBRA for a year and assumes they are covered can emerge with a permanent surcharge. Losing job health coverage and Medicare and employer coverage both go through those dates in detail.

Common questions about COBRA and the Marketplace

Does being offered COBRA stop me getting a subsidy?

No. Coverage offered by a former employer, including COBRA and retiree coverage, can be declined without losing eligibility for the premium tax credit. It is enrolling in that coverage that changes the answer.

How long do I have to decide?

Generally 60 days from the date of your COBRA election notice. Losing job-based coverage also opens a Marketplace special enrollment period, so both doors are open at once for a limited time. Use the overlap to compare rather than to delay.

Can I start on COBRA and switch to a Marketplace plan later?

You can switch during open enrollment, or if your COBRA runs out entirely. But voluntarily dropping COBRA mid-year does not itself open a Marketplace window, and it can affect your eligibility for the credit. This is the sequence worth getting right the first time.

Will my doctors be in the Marketplace plan?

Sometimes, but never assume it. Check each doctor you intend to keep against the specific plan’s network before enrolling, not against the insurer’s name. Two plans from the same company can have very different networks.

What does it cost to have someone compare this with me?

Nothing. Carriers pay the agent, and what you pay is the same whether you enroll through an agent or on your own.

Before the 60 days run out

This is a decision with a deadline attached and a couple of ways to get it permanently wrong, which is a bad combination to work through alone in the weeks after losing a job. The comparison itself is not complicated once someone puts both real numbers side by side.

Call or text 770-765-7007, or pick a time — plain-language answers at no cost, and someone who is still there after you enroll. We are in Cumming, Georgia, and work with households across North Georgia: Forsyth, Cherokee, Hall, Dawson, Lumpkin, Pickens, Gilmer, Fannin, Union and White counties, plus north Gwinnett and north Fulton.