Losing your job comes with a jarring financial reality check, especially when that COBRA benefits letter arrives. Suddenly, you’re staring at monthly premiums of $400 to $700 per person that used to cost you a fraction of that amount. For many people facing unemployment, COBRA feels like an expensive safety net, but the ACA Marketplace might offer a softer landing for your budget.

The decision between COBRA and Marketplace insurance isn’t just about money, though cost often drives the choice. It’s about timing, subsidies, and whether you’re willing to potentially switch doctors and start fresh with new deductibles.

The COBRA Reality Check

COBRA lets you keep your exact same employer health plan, but now you pay the full freight. COBRA insurance typically costs 102% of the total health plan premium, which means you’re paying what both you and your employer used to contribute, plus up to a 2% administrative fee.

In 2023, the average annual premium cost for employer-sponsored health insurance was $8,435 for individual coverage and $23,968 for family coverage. But employers covered $7,034 of the individuals’ premium and $17,393 for families, on average. With COBRA, you shoulder the entire burden.

What this means in real dollars: you could be paying average monthly premiums of $703 to continue your individual coverage or $1,997 for family coverage. That’s often a 300-400% increase from what you were paying through payroll deduction.

COBRA’s Advantages Worth Considering

COBRA shines when continuity matters most. You keep your same doctors, your same prescription coverage, and if you’ve already met your deductible for the year, you maintain that progress. This can be crucial if you’re managing ongoing medical conditions or are in the middle of treatment.

The coverage lasts 18 to 36 months depending on your situation, giving you breathing room to find new employment or transition to other coverage. You also have 60 days to decide whether to elect COBRA, and coverage is retroactive to your last day of work.

ACA Marketplace: The Subsidy Advantage

Here’s where the Marketplace often wins on affordability. Right now in 2025, subsidies are more robust than they usually are, but this enhanced benefit is set to expire at the end of this year. Currently, there is no “subsidy cliff,” which means nobody purchasing coverage through the Marketplace has to pay more than 8.5% of their household income (an ACA-specific calculation) for the benchmark silver plan, regardless of how much they earn.

This enhanced subsidy structure means even higher-income individuals can qualify for help. These individual health plans are typically much less expensive than COBRA plans, especially if you qualify for a subsidy. In fact, 80% of people will usually qualify for financial help from the government (called a subsidy) to help pay their premium.

The Income Sweet Spot

In 2025, for individuals with income up to 150 percent of the federal poverty level (FPL), the required contribution is zero, while at an income of 400 percent FPL or above, the required contribution is 8.5 percent of household income. This means if you’re unemployed or earning significantly less, you might qualify for heavily subsidized or even free coverage.

The key insight many people miss: To qualify for a subsidy for your Marketplace coverage, you can’t also be enrolled in COBRA or any other type of qualifying coverage. You have to choose one or the other.

There’s an important coverage gap to know about: if you live in one of the 10 states that haven’t expanded Medicaid (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming), you might fall into a “coverage gap.” In these states, adults with very low incomes may earn too much for traditional Medicaid but too little to qualify for Marketplace subsidies, making COBRA potentially the only viable option despite its high cost.

The 2026 Subsidy Cliff Warning

There’s a critical timing issue to consider. The enhanced subsidies are scheduled to sunset at the end of 2025, which means subsidies will be smaller in 2026, and the “subsidy cliff” will return, making subsidies unavailable to people with household income above 400% of the federal poverty level.

If the subsidies expire, the Congressional Budget Office projects that marketplace enrollment would drop from an estimated 22.8 million in 2025 to 18.9 million in 2026. If you’re planning your coverage strategy for 2026, this could significantly impact your decision.

When COBRA Makes Sense

Choose COBRA if you’re in the middle of significant medical treatment and need to maintain your provider relationships. It’s also the better choice if you’ve already met your annual deductible and out-of-pocket maximum, especially late in the year.

COBRA is also worth considering if your former employer offers particularly rich benefits that would be expensive to replicate on the Marketplace, or if you expect to find new employment with benefits within a few months.

The Timing Factor

You can enroll in a Marketplace plan within 60 days of losing your job-based coverage. However, if you choose to enroll in COBRA, you have to stick with that plan until the policy ends or until the annual ACA Open Enrollment Period. You can’t switch to marketplace coverage simply because you want to drop COBRA coverage midyear, unless specific circumstances apply.

When the Marketplace Wins

For most unemployed people, especially those with moderate to lower incomes, Marketplace plans offer better value. According to insurance experts, ACA plans tend to be much cheaper than COBRA rates for people who qualify for subsidies.

The Marketplace is especially beneficial if you’re healthy, don’t have ongoing treatment relationships you need to maintain, and your income qualifies you for subsidies. It’s also the better long-term choice if you expect to be unemployed or self-employed for an extended period.

Smart Strategies for Your Situation

Compare Total Costs, Not Just Premiums

Look beyond the monthly premium to compare deductibles, out-of-pocket maximums, and prescription drug coverage. A lower-premium Marketplace plan might have a higher deductible that negates the savings if you need significant medical care.

Consider Your Provider Network

Healthcare provider networks change regularly, so it’s important never to assume your doctors will be covered. If keeping your current doctors is essential, verify they accept the Marketplace plan you’re considering.

Time Your Decision Strategically

If you’re close to meeting your current deductible or it’s late in the year, COBRA might make sense for the remainder of the year. You can then switch to a Marketplace plan during the next open enrollment period.

The Bottom Line

For most people losing employer coverage, the Marketplace offers better financial value, especially with current enhanced subsidies. COBRA serves as expensive insurance continuity when you need your exact same coverage and providers. The decision often comes down to whether you prioritize savings or seamless healthcare continuity during your transition period.

Don’t let the complexity paralyze you. You have 60 days to decide on COBRA, and losing job-based coverage qualifies you for a special enrollment period on the Marketplace. Use that time to get quotes, check provider networks, and calculate your real costs for both options.