Health Insurance Options When You Lose a Job

COBRA vs. Marketplace Insurance Options

unemployment businesswoman
Photo: thianchai sitthikongsak / Getty Images

Known for being an expensive, short-term solution, COBRA was once the only option available to cover the health insurance gap between jobs. Finding a comparable individual or family policy on the open market used to be impossible or out of reach for most people. That changed with the passing of the Affordable Care Act (ACA), also known as "Obamacare."

Here's how COBRA and ACA Marketplace insurance compare.

Key Takeaways

  • COBRA and the ACA Marketplace both offer a way for Americans to stay insured between jobs.
  • COBRA generally costs more than comparative plans offered through the Marketplace, so it's worth exploring all your options.
  • If you take COBRA, your window to sign up for Marketplace plans closes, but a 60-day window will reopen when your COBRA coverage ends.

Health Insurance After a Job Loss

COBRA is still offered to employees who are laid off or terminated from a job, but these days there is another more permanent solution. When you leave or lose your job, a window opens to the government’s Health Insurance Marketplace. You can use this window to shop for plans in your state or region.


COBRA coverage is generally available if your former employer had at least 20 full-time employees. Depending on your state’s laws, you may also qualify for insurance continuation if your employer had fewer employees.

In recent years, open enrollment on the Marketplace has typically been restricted to the period from Nov. 1 to Jan. 15 (although you must enroll by Dec. 15 if you want coverage to start on Jan. 1). However, when you leave a job outside of the normal enrollment period, you have a 60-day enrollment window to shop and sign up for coverage.


COBRA continuation coverage refers to benefits extended by the Consolidated Omnibus Budget Reconciliation Act (COBRA). This law gives most employees losing a job the right to continue receiving health insurance benefits for a set time—typically 18 or 36 months. COBRA plans are nearly identical to the insurance offered by your employer, but you may need to pay extra premium costs in addition to a 2% administration fee.


Even if you love your current plan and prefer to take COBRA, it pays to visit the Marketplace and compare the costs. COBRA is generally considered the most expensive option but may be comparably priced to some plans depending on where you live and your level of coverage.

Affordable Care Act

Under the ACA, the government’s Health Insurance Marketplace provides individuals a way to shop for coverage on their own. They can use this resource to see how individual and family plan prices compare to COBRA. They can choose from a variety of plans based on what meets their needs.

Keep in mind that through the government Marketplace, you may qualify for cost-saving premium tax credits, Children’s Health Insurance Program (CHIP) coverage, or free or low-cost Medicaid based on your income and dependents.


Premium tax credits are generally available to those who earn from 100% to 400% of the federal poverty threshold. The 400% limit was temporarily suspended for tax years 2021 and 2022.

Can You Just Skip Insurance Coverage?

Whether you decide to take COBRA or shop for a Marketplace plan, health coverage is a must. Opting out of health coverage is simply not a sensible option for several reasons, including:

  • Financial penalties: While the federal “shared responsibility payment” no longer applies as of 2019, some states have individual insurance mandates with financial penalties for lack of coverage.
  • Unexpected out-of-pocket expenses: Even young, healthy people can find themselves with steep medical bills after an illness or accident. Uninsured patients often pay two to four times as much as insurers for the same treatments.
  • Worse health care outcomes: Unsurprisingly, interruptions in access to care lead to worse outcomes for patients. For example, studies have shown that cancer patients with gaps in coverage have worse survival rates than those who have access to continuous health insurance coverage.

How To Find a Health Insurance Plan

To find coverage and prices in your area, you can visit and compare online or call 1-800-318-2596 (TTY: 1-855-889-4325) with questions. You won’t know the full cost of your health coverage until you investigate and find out which options are available to you.

How To Drop COBRA for a Marketplace Plan

If you do decide to take COBRA, the Marketplace window will close. If you want to shop for your own coverage in the future, you will have to wait until the next open enrollment period or a special enrollment period to shop for a Marketplace plan.

You can drop COBRA at any time during the open enrollment period or a special enrollment period to shop for your own policy.

If your COBRA coverage ends, you must find health insurance on your own. If your coverage ends during a time that’s outside of an enrollment period, the 60-day window to shop for Marketplace coverage will open to you again. 

Frequently Asked Questions (FAQs)

How does COBRA insurance work?

You have 60 days to enroll in COBRA after leaving your employer's plan, and coverage typically lasts for 18 or 36 months. During that time, your coverage will be the same as it was under your former employer, although you may need to pay the entire premium cost in addition to a 2% administrative fee. Dependents such as spouses and children are also eligible for coverage regardless of whether you want COBRA coverage.

What is the income limit for the health insurance marketplace?

Anyone can get health insurance through the ACA marketplace, but not everyone will qualify for tax credits that offset the cost of coverage. The income limit for premium tax credits is generally 400% of the federal poverty threshold, although this limit was suspended for tax years 2021 and 2022. You can use an online calculator to see details about your situation.

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  1. Department of Labor. "FAQs on COBRA Continuation Health Coverage for Workers," Page 1.

  2. "When Can I Enroll in 2023 Marketplace Insurance?"

  3. “Enroll in or Change 2022 Plans — Only With a Special Enrollment Period.”

  4. Department of Labor. "FAQs on COBRA Continuation Health Coverage for Workers," Pages 5-6.

  5. Department of Labor. "COBRA Health Coverage."

  6. “Medicaid & CHIP Coverage.”

  7. Internal Revenue Service. "Eligibility for the Premium Tax Credit."

  8. eHealth. "Does Your State Require You to Have Health Insurance?"

  9. “Fee.”

  10. Kaiser Family Foundation. “The Uninsured and the ACA: A Primer — Key Facts About Health Insurance and the Uninsured Amidst Changes to the Affordable Care Act.”

  11. American Cancer Society. “Study: Changes in Health Insurance Coverage Can Harm Cancer Survivors.”

  12. “COBRA Coverage and the Marketplace.”

  13. Department of Labor. "COBRA Health Coverage."

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