COBRA keeps the employer plan and charges the client full price for it. The Marketplace replaces the employer plan and may charge far less once APTC is applied. For most clients who just lost job coverage and earn under $60,000, the Marketplace is the cheaper option by a significant margin. The brokers who run both numbers before recommending anything are the ones whose clients do not call back in month two asking why their premium is $700.
Key Takeaways
- COBRA lets a client keep their employer plan but requires them to pay the full premium the employer was contributing, plus up to a 2 percent administrative fee. For most employer plans that is $500 to $800 or more per month for a single adult.
- Loss of employer coverage is a SEP trigger. The client has 60 days from the last day of coverage to enroll on the Marketplace without waiting for OEP.
- For clients who qualify for APTC, the Marketplace is almost always cheaper than COBRA. The APTC is calibrated to make a Silver plan cost a set percentage of household income. COBRA has no subsidy.
- Electing COBRA does not restart or extend the SEP window. The 60-day window runs from the loss of coverage, not from when the client decides against COBRA.
- COBRA makes sense for clients in three specific situations: income too high for meaningful APTC, a large deductible already met mid-year on the employer plan, or a specialist network that is not available on any Marketplace plan in the area.
What COBRA actually costs
COBRA continuation coverage lets a client stay on their former employer's group plan for up to 18 months after a qualifying event. The cost is the full premium the employer was paying on their behalf, plus up to a 2 percent administrative fee. Most employees have no idea what the employer contribution is until they see the COBRA election notice. The number is frequently a shock.
Employer-sponsored single coverage ran at a national average of over $8,000 per year in recent plan years. When the employer was covering 70 to 80 percent of that, the employee contribution was manageable. On COBRA, the client pays 100 percent plus the administrative fee. A client whose employer plan cost them $120 per month as an employee may see a COBRA premium of $580 or higher for the same plan. That is not a typo. That is the employer subsidy disappearing.
Head-to-head: COBRA vs Marketplace
| Factor | COBRA | Marketplace |
|---|---|---|
| Monthly cost | Full employer premium + up to 2% admin fee. Often $500 to $900/month for a single adult. | Gross premium minus APTC. Can be $0 to $200/month for APTC-eligible households. |
| Subsidy available? | No. Client pays 100% of the group rate regardless of income. | Yes, if income is between 100% and 400%+ FPL. APTC is applied directly to the monthly premium. |
| Plan continuity | Yes. Same plan, same network, same providers, same deductible progress. | New plan. Provider network may differ. Deductible resets on the new plan effective date. |
| Duration | Up to 18 months for job loss. Up to 36 months for other qualifying events. | Annual. Client re-enrolls each OEP. Coverage continues as long as premiums are paid. |
| Enrollment deadline | 60 days from receiving the COBRA election notice to elect. Retroactive to loss date. | 60 days from last day of employer coverage to enroll via SEP. |
| Best for | Clients above 400% FPL with no APTC, or clients who have met a large deductible mid-year. | Most clients. Especially any household eligible for APTC. |
The 60-day window and why COBRA timing matters
Loss of employer coverage opens a 60-day SEP on the Marketplace. The clock runs from the last day of employer coverage, not from when the client receives the COBRA election notice, not from when they decide they do not want COBRA. If a client spends 50 days weighing the decision and then tries to enroll on the Marketplace, they have about 10 days left. If they wait until day 61, they must wait for the next OEP unless a new qualifying event occurs.
Electing COBRA does not stop or reset the Marketplace SEP window. A client who elects COBRA on day 10 and switches to the Marketplace on day 40 is still within the original SEP window. The Marketplace enrollment will be effective the first of the month following plan selection. At that point, the client can drop COBRA without a penalty. For the full SEP trigger list and documentation, read how brokers handle SEP qualifying life events.
Two clients, same situation, different math
Example: two clients who lost employer coverage on the same day. Same former employer plan cost. Different incomes and different answers.
| Client profile | Income | COBRA est. | Marketplace est. | Recommendation |
|---|---|---|---|---|
| Single adult, 38, lost tech job | ~$42,000 projected (250% FPL) | $620/month (full group rate + admin) | $110/month net after APTC on a Silver plan | Marketplace. APTC cuts the monthly cost by over $500. COBRA is not competitive at this income. |
| Couple, ages 52 and 50, one spouse lost job | ~$95,000 projected (500% FPL) | $1,100/month (full family group rate) | $860/month gross Silver, minimal APTC at this income | Compare closely. If the group plan's network includes providers they rely on and the deductible is mid-year, COBRA may be worth the cost for the remainder of the year. |
Illustrative examples. Actual COBRA premiums, Marketplace plan costs, and APTC depend on the former employer plan, rating area, household size, and the specific plan year.
The pattern: APTC is the deciding variable. At 250 percent FPL, the Marketplace APTC covers most of the Silver premium. At 500 percent FPL, APTC is minimal or absent and the comparison becomes network, deductible continuity, and a narrower premium gap. Run the actual numbers for both before the client makes a decision.
When COBRA is the right answer
Three situations where COBRA is worth serious consideration, not just a fallback for clients who do not want to switch plans.
Income above the APTC meaningful range. Clients with household income significantly above 400 percent FPL receive little to no APTC. The Marketplace gross premium for a couple in their 50s can be comparable to the COBRA premium. If the employer plan has a better network, COBRA may be worth the cost.
Large deductible already met mid-year. A client who lost coverage in July and has already met $4,500 of a $5,000 deductible has a strong argument for COBRA. A Marketplace plan resets the deductible on the new effective date. If the client has upcoming high-cost procedures, the remaining $500 to deductible on the old plan may be far less than starting over on a new one.
Specialist network with no Marketplace equivalent.In some markets, specific academic medical centers or specialty practices are in-network on employer plans but not included in any Marketplace plan's network. For a client actively treating a serious condition with a provider in that situation, COBRA may be the only way to maintain that specific care relationship.
The metal tier question once the client picks Marketplace
Once the COBRA vs Marketplace decision is made in favor of the Marketplace, the tier conversation starts. A client with income in the CSR range should see Silver plans first. A client above the CSR range with minimal utilization is likely a Bronze client. The Marketplace comparison also gives a second chance to check network and make sure the client's current providers are covered before enrollment. For how the four metal tiers interact with APTC, read ACA metal tiers explained.
Pre Medicare clients in the 55 to 64 window have a different subsidy shape. See ACA plans for early retirees 55 to 64.
FAQ
Questions brokers and clients ask about choosing between COBRA and Marketplace coverage.
If a client elects COBRA and then changes their mind, can they switch to the Marketplace?
Only if they are still within the original 60-day SEP window from the loss of employer coverage. Electing COBRA does not restart or extend the window. A client who elects COBRA on day 30 and changes their mind on day 55 has roughly five days left to enroll on the Marketplace. A client who waits until day 61 cannot enroll until the next OEP unless a new qualifying event occurs.
Does losing a job always trigger a Marketplace SEP?
Loss of employer-sponsored coverage triggers the SEP, not job loss itself. A client who resigns and retains employer coverage through the end of the month has a SEP from the last day of that coverage, not from the resignation date. A client who loses a part-time job with no coverage has no coverage loss and no SEP trigger from that event alone.
Can a client claim APTC on the Marketplace and also be on COBRA?
No. A client who is enrolled in COBRA has coverage available and is not eligible for APTC during the months they are enrolled in COBRA. APTC is only available for months the client is enrolled in a Marketplace plan with no other minimum essential coverage available.
Is the mid-year deductible argument for COBRA actually worth it?
Sometimes, for clients with high medical utilization who have already met most of their deductible. The math: if a client has met $4,000 of a $5,000 deductible by June and has upcoming procedures, paying $600/month in COBRA for five months ($3,000 total) to access coinsurance coverage may be less than starting a Marketplace plan with a fresh deductible. Run the numbers with the specific deductible remaining and the anticipated claim costs before recommending either way.
How long does COBRA coverage last?
Up to 18 months for job loss or reduction in hours. Up to 36 months for other qualifying events such as divorce, death of the covered employee, or a dependent aging out of the plan. Clients with a disability determination from Social Security may qualify for an 11-month extension beyond 18 months.
