The real comparison

Compare the total for the gap, not the monthly premium

Neither option is automatically cheaper. This is arithmetic built from three facts: projected household income for the full year, how much of the current plan's deductible and out-of-pocket limit you have already met, and whether the doctors who matter stay in network.

Work in months until your next expected coverage starts, and price both sides over that same period. For COBRA: the monthly premium multiplied by the months, plus the cost sharing you expect under the current plan. For the Marketplace: the premium after any tax credit multiplied by the months, plus expected cost sharing under the new plan, plus anything that falls out of network.

Do not treat the whole deductible as an automatic expense. Use the care you actually expect during the gap. The deductible matters because it changes how much of that care you pay for, not because everyone spends it in full.

The COBRA price

COBRA costs more than the payroll deduction you remember

COBRA continues the same plan, with the same benefits, copays and deductible available to similarly situated active employees.

The premium is where it changes. While employed you saw only your share come out of each payslip; the employer's contribution never appeared on it. Under COBRA you generally pay both shares plus an administrative charge, up to 102% of the total premium in the standard case.

An employer can subsidise COBRA through a severance agreement, but nothing requires it. When you run the numbers, use the total premium, not the old paycheck deduction — that single substitution is the most common reason a COBRA estimate comes out wrong.

The deadlines: 60 days to elect from the later of coverage ending or the notice arriving, then 45 days to pay, with coverage backdating to the day the old plan stopped. Waiting inside that window is a usable tactic for a short healthy gap — but it does not pause the Marketplace's separate 60-day clock, and missing either COBRA deadline leaves the whole gap uncovered. All of the clocks, in order

Work out the full premium

The Marketplace price

Marketplace savings use projected income for the whole year

The Marketplace may lower your premium through a premium tax credit, based on the income and household details on your application.

After a job loss, use projected household income for the full calendar year. That includes what you already earned before the job ended, expected unemployment compensation, a spouse's income, and anything you expect to earn later in the year. Current monthly income on its own is not the calculation.

The credit can be paid to the insurer in advance to lower the monthly bill, then reconciled on your tax return against actual annual income. An estimate that comes in too low creates excess advance credits you have to repay.

For 2026 coverage the temporary expansion has ended, and the credit is generally unavailable above 400% of the applicable federal poverty level (IRS Publication 974).

Check the income side before you decide

The trap

Being offered COBRA does not block a subsidy. Enrolling does.

This distinction is where the decision gets expensive, and it is the single most misunderstood rule in this whole area.

Being offered COBRA does not by itself make you ineligible for a Marketplace premium tax credit. The IRS treats former-employer coverage differently from an active employee's offer: you count as eligible for the COBRA plan only for the months you are actually enrolled in it.

Once you enrol, COBRA is employer-sponsored minimum essential coverage for those months. You cannot claim a premium tax credit for your own Marketplace coverage for the same months, and the credit cannot be applied to the COBRA premium either (IRS Publication 974).

  • Offered but not elected: the offer alone does not block the tax credit.
  • Elected: no premium tax credit for any month you are enrolled in COBRA.
  • Ended early by choice: does not create a new Marketplace enrollment window.
  • Exhausted on schedule: the scheduled end of COBRA does qualify you to move to the Marketplace outside Open Enrollment.

You can still switch to a Marketplace plan after electing COBRA, as long as your original 60-day loss-of-coverage window is open. During annual Open Enrollment you can also leave COBRA freely. It is after that window closes that dropping COBRA voluntarily traps you until Open Enrollment or until COBRA runs out (HealthCare.gov).

Confirm the Marketplace plan's effective date before cancelling COBRA. Do not create a gap by assuming new coverage starts immediately.

Deductible progress

A nearly met deductible can reverse the comparison

COBRA continues the same plan, so deductible and out-of-pocket maximum progress already credited this plan year generally stays credited.

A Marketplace plan is a different contract. Switching can reset that progress to zero. A lower monthly premium is easily wiped out by paying through a second deductible in the same year while treatment is ongoing.

  • The full COBRA premium — the total monthly amount once the employer contribution ends.
  • Deductible progress — how much is credited, and how much remains.
  • Out-of-pocket progress — the same two numbers again.
  • Expected care during the gap — appointments, procedures, prescriptions, therapy, imaging.

Which one wins

What each option needs in order to be the cheaper one

COBRA tends to win when the current plan already has value built into it.

  • The deductible or out-of-pocket maximum is largely met.
  • Treatment, surgery, pregnancy care, therapy or diagnostic work is already under way.
  • A specialist or facility relationship matters and no Marketplace plan includes them.
  • The gap before the next employer plan is short enough that restarting cost sharing would cost more than the premium difference.

The Marketplace tends to win when there is little to preserve.

  • Projected household income for the year is low enough to produce a meaningful credit.
  • Little or none of the current deductible has been met.
  • No major treatment is active or scheduled.
  • Your doctors, hospitals and prescriptions are covered by a plan that is actually available to you.
  • The gap is long enough for the monthly difference to outweigh what you would give up.

“The Marketplace” is not one plan. A low headline premium tells you nothing about whether a particular doctor, hospital or medication is covered — check the network and the drug list for the specific plan, not the insurer's general directory.

The bottom line

It depends, and here is what it depends on

COBRA and the Marketplace cannot be compared on premium alone. The answer turns on the full COBRA premium once the employer share disappears, the Marketplace premium after any credit, the value of deductible progress you already earned, and what it costs to change doctors or interrupt treatment.

Calculate both totals over the same number of months before you elect anything — and protect both enrollment deadlines while you are still deciding.