COBRA vs ACA: Which one should I choose?
Losing or quitting your job can be stressful enough by itself. But often it also comes with the added issue of losing employer-sponsored health insurance for you and your family. You’re presented with COBRA coverage as an option, and then there’s health insurance under the Affordable Care Act.
So which one is better? Typically ACA insurance is more affordable than COBRA insurance because you can be eligible for federal ACA subsidies, depending on your income. COBRA costs an average of $599 per month. An Obamacare plan of similar quality costs $462 per month—but with the government subsidies available, the average cost of an Obamacare plan on HealthSherpa is less than $10 per month.
But ultimately, it depends on your situation. If you’re not eligible for government subsidies and the costs of COBRA and ACA are similar, or if you’ve used up the deductible on your employer insurance before you leave your job, it might make sense for you to do a COBRA plan.
Grab our free guide to the differences between COBRA and ACA insurance. You can download it and refer back to it later.
What is COBRA?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It applies to any group health plan maintained by the state or local government or by a private company with 20+ employees. If you’re about to lose your employer-based health benefits under certain circumstances, COBRA allows you to continue being on your employer’s group health plan at your own expense. It also covers your spouse and any dependent children on your health plan.
What is ACA health insurance (aka Obamacare or Marketplace insurance)?
ACA health insurance refers to individual health insurance plans that meet the “minimum essential coverage” and other requirements of the Affordable Care Act. You can explore and enroll in ACA health insurance plans by putting in your zip code below—this tool will show you if you’re eligible for Medicaid or a subsidy on Marketplace insurance, and how much a plan would cost you.
Who can enroll in COBRA health insurance?
If your employer-sponsored health insurance plan is covered under COBRA, you’ll get COBRA insurance as an option if you quit or lose your job. You’re also eligible if your hours are reduced. If you have a spouse or dependent children on your employer-based health insurance, they’ll also be covered in those circumstances. In addition, they can also enroll in COBRA health insurance if you become entitled to Medicare, get a divorce or legal separation, or pass away.
Each qualified beneficiary is independent of others. That means each individual can make their own choices as to what sort of coverage to get under COBRA.
Who can enroll in ACA health insurance?
Nearly all Americans can enroll in ACA health insurance. The main exceptions are if you do not live in the United States, are in prison, or have Medicare coverage. Those who are not U.S. citizens or U.S. nationals can also be eligible, depending on their status.
When can I enroll in COBRA coverage?
Typically you have at least 60 days after you lose your employer-sponsored health insurance to decide whether you want to enroll in COBRA health insurance.
COBRA coverage can also be retroactive, so no need to worry about a coverage gap during that enrollment window either. If you decide to pay for COBRA coverage and pay your premiums retroactively, your coverage will also be retroactive. That means any medical bills that would have been covered during your enrollment period will be reimbursed once you’re enrolled.
When can I enroll in ACA health insurance?
If you lose your employer-sponsored insurance, you’ll have 60 days to enroll in an ACA health insurance plan.
Each year there is an Open Enrollment Period when you can enroll in ACA health insurance. Outside of the Open Enrollment Period, you are eligible for a Special Enrollment Period if you have a Qualifying Life Event such as losing a job or getting married. Typically this Special Enrollment Period is 60 days. If you miss the Special Enrollment Period after your Qualifying Life Event, you will have to wait until the next Open Enrollment Period to get health insurance.
How long does COBRA health insurance last?
How long COBRA lasts actually depends on the circumstances, but it typically ranges from 18 to 36 months. However, you have to use your COBRA coverage without interruption. So if you choose to terminate your COBRA coverage during that period, you cannot start it up again.
How much does COBRA cost?
The cost of COBRA insurance depends on the health insurance plan you had under your employer. Nothing changes with your health insurance coverage, but now you are responsible for paying the full monthly premium. In addition, you also have to pay a 2% COBRA administration fee.
COBRA costs an average of $599 per month. An Obamacare plan of similar quality costs $462 per month—but 94% of people on HealthSherpa qualify for government subsidies, bringing the average cost down to $48 per month.
How much does ACA health insurance cost?
The cost of ACA health insurance depends on the type of plan you choose. They can range from catastrophic plans with low premiums and high deductibles. All the way to gold tier plans with higher premiums and more comprehensive coverage. Before subsidies, the average lowest-cost Bronze plan in 2020 was $331 per month and the average Silver plan was $$442 per month, according to the Kaiser Family Foundation. However, after subsidies, the average person in HealthSherpa’s study paid $47 because they received a subsidy of an average of $634. Although the sticker price of Obamacare plans can be high, 94% of people received a subsidy on HealthSherpa during 2020 Open Enrollment.
Enter your zip code below to find out how much you can save:
If you need help enrolling, you can call our Consumer Advocates at (872) 228-2549.
What happens if I already have COBRA coverage – can I switch to ACA health insurance?
Yes and no. If you choose to enroll in COBRA, you can switch to ACA health insurance under the following circumstances:
- You have used up all of your COBRA coverage.
- You have another qualifying life event that makes you eligible for another Special Enrollment Period.
- It is the annual Open Enrollment Period.
You won’t be able to switch to ACA health insurance outside of those situations. So consider your circumstances before discontinuing your COBRA coverage, or you may end up without health insurance coverage.
So when it comes to COBRA vs. ACA health insurance, which one should you choose?
It depends on your individual circumstances. When weighing COBRA health insurance against ACA health insurance, consider both your financials and your health needs.
For some people, subsidies may make ACA health insurance significantly cheaper than paying for COBRA. Enrolling in ACA health insurance also allows you to pick a different health insurance plan, which can be useful if your previous employer-sponsored one is no longer the best one for your health needs. For others, enrolling in COBRA health insurance to stay on your previous plan may be the most financially sound choice and can be the easier route, especially if you expect to be on another employer-sponsored health insurance plan soon.
Make sure to explore your ACA health insurance options and find out if you qualify for a subsidy before comparing it to your COBRA health insurance option.
Why does it matter if I’ll be on another employer sponsored plan soon when choosing to go with COBRA or ACA?
It’s hard to switch from COBRA to ACA insurance unless you have a qualifying life event or it’s Open Enrollment Period, and COBRA tends to be more expensive than ACA plans. So if you’re choosing COBRA, make sure you have the money to last the entire time you need insurance. ACA plans are the more affordable option for most people.
Does COBRA recognize the out of pocket expenses already paid under employer paid insurance or does the ex employee have to start over with out of pocket & deductibles?
COBRA does recognize the out of pocket expenses paid. COBRA is a continuation of your employer coverage, so it’s the exact same plan. For example, if you’ve already hit your deductible for 2020 and you lose your job, if you choose to continue on COBRA, you’ll still have a fully paid deductible.
If I am under my parents health insurance and if I am going to be 26 years old I know I can do cobra does that mean I have to pay the whole entire health insurance plan?
Yes, you’d have to pay the whole cost. I recommend you see plans and prices at healthsherpa.com, or call us at (872) 228-2549 for help.
Could you please comment on the potential risk of choosing an ACA plan currently given the pending court case “California v. Texas”? I recently lost my job and have to decide between COBRA and an ACA plan. I worry the ACA plan puts me at great risk if the program is dismantled.
https://en.wikipedia.org/wiki/California_v._Texas
Hello! It’s very unlikely the ACA will be dismantled any time soon, especially during the pandemic.
Hello,
I recently lost my job and my company is offering to reimburse my COBRA premium for six months. My monthly premium will be $1059.52. I cannot afford this after the six month reimbursement period. However, six months will take me through January of 2021. Could I stay on COBRA until the open enrollment period of ACA and then apply for a plan in the marketplace? My company insurance was really good: No deductible, $25 copay, $50 emergency room copay, 20% for generic prescriptions and 25% for specialty prescriptions, free ambulance. So I would like to stay on it as long as I can.
When your company stops reimbursing for COBRA, you’ll get a Special Enrollment Period where you’ll have 60 days from losing coverage to get an ACA plan. In January, give us a call at 872-228-2549 and we’ll get you set up with a new plan, or you can go to healthsherpa.com to see plans and prices.
Dear HealthSherpa:
I have a similar situation as that described above. I will loss my job next month and will be covered by Cobra for 18 month but my employer only subsidizes the cobra for 12 month which will be August 2021, 5 month before annual enrollment period of ACA for 2022. Am I eligible to start ACA in August 2022? Or do I have to stick to Cobra paying the higher premium till the end of the 18 month? Many thanks
When your employer stops subsidizing COBRA, you’ll be eligible for a 60-day Special Enrollment Period where you can enroll in an ACA plan. Come look at plans and prices at healthsherpa.com in July 2021 or give us a call at (872) 228-2549 to get set up with a plan.
I will be quitting my job in Illinois in October 2020. I will be moving from Illinois to Florida anytime between October 2020 to February 2021.
Should I elect to take Cobra beginning October 2020 or enroll in ACA Health Insurance under Special Enrollment circumstances?
Open enrollment for ACA Health Insurance is in November 2020 and becomes active January 2021. I anticipate either way I will need to enroll in Illinois during this period for 2021 coverage, correct?
I understand that it is difficult to randomly stop Cobra and obtain ACA Health Insurance; best to transition during open enrollment? Is this correct?
Unfortunately I don’t know what state I’ll be living in on January 2021 when insurance becomes active?
Please advise me on the best way to proceed with my Health Care coverage.
Thank you,
Lisa R.
You’ll have 60 days from quitting your job to enroll in an ACA plan. You have a couple options:
1. Enroll in an ACA plan in Illinois beginning in October 2020, then enroll in a Florida plan whenever you move (you’ll get a Special Enrollment Period when you quit your job and then another SEP when you move).
2. Enroll in a COBRA plan in October 2020, then switch to a Florida plan when you move (you’ll get an SEP if you move and your COBRA insurance doesn’t work in Florida, or you can switch during Open Enrollment)
As long as you are insured before the move, you’ll get a Special Enrollment Period when you move, so don’t worry about not knowing where you’ll be in January. You can just enroll in your new state when you know your moving date.
I’d recommend that you go to healthsherpa.com and see the price of an ACA plan and compare that to your COBRA option so you can pick the better deal. ACA plans are typically more affordable than COBRA because most people qualify for subsidies that lower the cost.
It is difficult to stop COBRA and switch to ACA – you have to do that during Open Enrollment or when your COBRA runs out, but if you move and your COBRA does not work in your new state, that will grant you a Special Enrollment Period where you can enroll in ACA coverage.
Hope that helps! Give us a call at (872) 228-2549 if you need help enrolling or have more questions.
I just lost my job Oct 27. I also just reached my deductible. I have a serious medical condition. I was in the process of getting pregnant authorization for a very expensive medication that would have been covered under my insurance company. i have no income whatsoever. Used all of my disability & am not eligible for unemployment. Please advise me of what I should do. Thank you.
Do you qualify for COBRA? You could do COBRA, or you could enroll in an ACA plan – and you might be eligible for Medicaid depending on your income. Go to healthsherpa.com to look at plans and prices or call us at (872) 228-2549
Hello,
I’m turning 26, but can receive adjunct benefits through the University I work part-time for. I’m unsure how to determine if going through the ACA or through my employer based health insurance would be better for me. What’s the best way to compare?
I recommend you give us some info so we can tell you how much an ACA plan would cost you, and then compare that cost to your employer based health insurance. Start here and we’ll tell you how much your plan would cost: https://www.healthsherpa.com/marketplace/zip_code
I have MS and I’ve been furloughed. I can get Cobra and pay a hefty monthly premium and fill my MS specialty medication at $15 per month as I did before furlough. If I get coverage through the Marketplace I qualify for a low monthly premium but they cannot give me the cost of my prescription after Kaiser pays 55%. I could be paying a couple thousand monthly for one prescription. I can’t afford that. I’m lost.
There may be other Marketplace plans that cover your medication better than the Kaiser plan. You can call us for help at (872) 228-2549.
Hi – I lost my job 12/31/19. I have COBRA until 6/30/21, the company stopped paying their share June 2020. Can I stay on COBRA until the 18 months end, 6/30/21, and then enter the ACA marketplace beginning 7/1/21?
Or, can I sign up for ACA now but delay beginning coverage until 7/1/21?
Thank you,
RJB
Your options are:
1. Stay on COBRA and pay the full price for your premium, then switch to an ACA plan. Once your COBRA runs out, you’ll have a 60-day window to enroll in ACA coverage.
2. Switch to an ACA plan right now during Open Enrollment (you have until Dec 15 in most states) and start coverage January 1, 2021. You can cancel your COBRA starting January 1.
It depends on your subsidy eligibility and how much your COBRA plan is, but for most people, ACA coverage is more affordable than COBRA (although there are some cases where this isn’t true). I’d recommend you check out ACA plans, see what the prices are, and compare that to what you’re currently paying for COBRA. You’ll have to give us some household information to get plans and prices. Enter your zip code and other info here to see plans in your area: https://www.healthsherpa.com/marketplace/zip_code
You can also call us for help at (872) 228-2549
Very helpful, thank you! How is the affordable aspect considered in cobra vs ACA? I will be forced to retire at age 60 in 2021. The cobra costs are very expensive but while employed, the insurance is very cheap. Depending how many months I work in 2021, my yearly self only coverage could be less than 9.85% of my income. However, if I work only 1 month in 2021, COBRA will be far above the 9.85% threshold and thus qualify me for the exchange. Could it be worth it to quit earlier in the year so that I could qualify for the exchange or is the % threshold based solely on income/insurance after I retire/quit?
Yes, could be worth it to quit earlier in the year. You’d have to calculate it out based on your costs. Also, Medicaid is based on monthly income, so you may qualify for that no matter when you quit.
You can give us a call at (872) 228-2549 to talk through the numbers.
Hi- I will be losing my employer based insurance 2/28/21. I’m weighing out my options between an ACA plan and COBRA. I was told that in order to qualify for a subsidy thru the ACA I will need to first be denied by Medicaid (based off my assets). Is this true?
It really depends on your income and household size. It sounds like you’ll either qualify for Medicaid or an ACA plan, which would likely be cheaper than COBRA. You can check your eligibility for subsidies at healthsherpa.com or call us at (872) 228-2549
Hi, it looks like the new bill in Congress will subsidize 85% or 100% of COBRA April through September. I lost my insurance at the end of 2020, and got an ACA plan. Can I switch to COBRA now?
It isn’t totally clear how they’ll implement this at this point, but they are indicating you can enroll in COBRA now and get the payments covered until September. You can only get COBRA covered if you were involuntarly terminated. If you quit, you won’t get COBRA covered.
I lost my job in April 2021 and had a family health plan. Can I sign up for Cobra plan for 6 months under Stimulus Payout until Sep 30 and then enroll in my wife health plan in October ?
Thanks
Yes, you can!
I lost my job in April 2021 and had a family health plan. Can I sign up for Cobra plan for 6 monQths under Stimulus Plan until Sep 30 and then enroll in my wife health plan in October ?
Thanks
Yes, you can!
My husband had a stroke in March of 2020.
Unable to return to work he retired and signed on with Cobra. His last day at work was October 31,
2020. Our first self-pay Cobra coverage began on
November 1, 2020.
We’ve had no gaps in coverage. The government website has included untoward “life events” as a standard for eligibility in its newly, daily amended updates.
Are my husband and I eligible for the newly subsidized Cobra program? “Don’t break my heart!
My achy breaky heart!”
Trying to catch Break in Chicago
He
Unfortunately, retirement is not a criteria for subsidized COBRA. But I’d recommend you check out ACA plans at http://www.healthsherpa.com. The American Rescue Plan expanded subsidies dramatically, so it’s likely ACA coverage would be much more affordable for you than COBRA.
I am paying considerably more than the average you’ve outlined in your article. I pay $1356.00 monthly for COBRA which I had to leave due to long term illness. Would it be wise to use a broker when searching for a different plan?
You can use a broker if you would like. You can also just call our customer support (they are all licensed brokers) at (872) 228-2549 or go to healthsherpa.com to see plans and prices.
It’s likely you can get a much more affordable plan through the ACA – subsidies have just been expanded significantly.
My husband was let go from his job in February 2020 due to a change of ownership at his Company. .
We have been on Cobra from February 2020 until August 2020 when my husband qualified for Medicare. His prior company required him to go on Medicare when he qualified. I have become the primary on our Cobra account and also have a dependent.
My question is do I, as the spouse and our dependent now qualify for a total of 36 months on Cobra due to my husband qualifying and going on Medicare while he was on Cobra?
Check with the employer to see how long your COBRA lasts. But ACA insurance is typically more affordable than COBRA, so I’d recommend you look into that.
My husband was diagnosed with stage 4 lung cancer Jan. 05, 2021 and was on STD. It was exhausted and now is on LTD starting today and his company switching from employer-based health insurance to COBRA. We don’t know how much would be the monthly cost to keep our great insurance coverage (PPO) from the company.
Would be wise to apply ACA now so we can afford the monthly payment so my husband can continue his treatments? Please advise, thank you!
You can apply for an ACA plan and just set the start date as the date your employer insurance ends. No need to have overlap in plans. You can go to healthsherpa.com or call us at (872) 228-2549 to enroll in a plan.
If you have a pre-existing condition, can you still get ACA coverage before your Cobra expires? How does that work? How do you ensure no gap in coverage?
Yes, all ACA plans must cover pre-existing conditions. You can fill out your ACA application before your COBRA expires. Go to healthsherpa.com or call us at (872) 228-2549.
I will be retiring February 7, 2022. My company open enrollment is in a few days from now. For the past 20 years me and my wife have been covered. The premiums are OK. I am going to be realizing a big income windfall in 2022, as I am going to be converting my 401K at work in to a Roth, which if I understand correctly, will be counted as income towards the subsidy. So my ACA subsidy would be pretty small- if any at all for 2022 only.
In 2023 we would not have much income so the subsidy would be much better then. My question is during my company open enrollment in a few days, can I take her off of the insurance thus reducing my premium for 2022, and then changing it to COBRA in Feb 2022. And then at the same time enrolling my spouse only in ACA that would start coverage on January1,2022 -using just her income- as I would still be covered under my company health plan thru end of January 2022, (and then COBRA the rest of the year). Or would we have to use my 401K conversion income for her estimated income in 2022, thus making her not qualify for much if any subsidy..Thank you!!
If you are married and file taxes jointly, then your household income will be used to determine her subsidy. If you are married and file taxes separately, then she’ll be ineligible for subsidies. I think the best option would be to leave her on your insurance for now, and then when you move to COBRA in February, check and see whether COBRA or ACA plans are cheaper and you can both enroll in whichever is the most affordable option.
Our union went on strike and the company cancelled our health insurance. We received the cobra info and our deadline to sign up is 12/20. We are signed up for ACA effective 1/1/22, but we have a 11 day window of no coverage if it would be needed. Can I sign up for Cobra before the deadline and since no payment is due for 45 days, I let it expire if we continue to be healthy during that entire time, no claims? our cobra payment is $2100, monthly, that would be backdated to Oct 5th. There is no unemployment pay during strike, so $2100 is a ton of money monthly. It’s that 11 day window of no insurance that is nerve racking.
Yes, you can also just do nothing and then retroactively sign up for COBRA if you need to. COBRA allows you to retroactively sign up for up to 2 months.
If you’ve already bought high deductible AHA insurance, and you’re eligible for COBRA for the next 60 days, can you return to COBRA as an add-on if there were an expensive health issue?
No, you may not have COBRA continuation and another insurance at the same time
Thanks for that. Can you select individual components, like dental or eye coverage off COBRA, if your AHA coverage doesn’t provide that? The COBRA seems to allow an a la carte approach. Thanks.
You can buy off-exchange vision and dental plans, or some Marketplace plans come with vision and/or dental.
My husband was terminated by his employer on 12/29/2021 and our medical insurance through the group plan ended 12/31/2021. We could not get any details right away on COBRA enrollment forms, etc. due to office closures with holidays, and my husband was scheduled for a medically necessary and urgent procedure on 1/13/2022 that we could not get rescheduled to a later date. As a stop-gap short-term measure, we purchased a family plan during the open enrollment period pending getting the COBRA details so that his procedure could proceed and our prescription drugs that we both regularly take could be filled. We just received the COBRA forms and details today for enrollment. Can we still enroll in COBRA and let the off exchange family plan go? Thanks
Yes, you can pick between COBRA and the off-exchange plan. And for future reference, you can get COBRA retroactively for up to 60 days.
I will lose coverage from my employer in March, but will start a new job with medical insurance in August so will only need a 4 month bridge. Can I get AHA coverage for such a short period of time?
Yes, you can enroll for 4 months. Go to healthsherpa.com to enroll.
I will be losing my job in April and have been told I can get Cobra cover for 36 months instead of 18 (I am in CA) can you tell me if this is correct?
COBRA can last for 36 months in some cases.
Thanks for the answer. Can you tell me how I qualify for 36 months versus 18?
You have to talk to your employer about that
Hello,
My company is offering employees to take voluntary leaves to avoid forced furloughs during our low season. With these voluntary leaves there is a loss of insurance and we are offered Cobra which causes concern for many of our employees who would not be able to afford the high Cobra payments. Would losing covering because of “voluntary leaves” allow us to choose between possibly subsidized ACA plans or Cobra and then resume our employer provider coverage when the high season starts back up and we return from our voluntary leaves?
Yes, losing coverage due to a voluntary leave would allow you to qualify for an ACA plan or Medicaid. Go to healthsherpa.com to see plans and prices or call us at (872) 228-2549.
My husband will be leaving his job next month and will pay for COBRA. It will cost about $600 per month for him and $1200 for both of us. He goes to many doctors and has had several procedures plus major surgery. He has already met the individual out-of-pocket on his current health plan. I am the complete opposite. I rarely go to the doctor and have never had any procedures or surgeries. Is it better for me to buy an ACA plan while he pays for COBRA? Will that save us money? I don’t want to pay $600 per month for COBRA health insurance that I probably will not use.
You can get an ACA plan while he gets COBRA. Go to healthsherpa.com to see plans and prices.
I’ve left my former employer to go self employed and my insurance coverage ended 4/15/22. I’m currently evaluating plans in the ACA Marketplace and noticed that if I choose a plan it will become effective as of 6/1/22. In addition I have access to enrolling in COBRA.
My concern is (as a family of 5) if something happens that requires medical attention between now and 6/1/22 effective date.
If I signup for ACA starting 6/1 and something happens requiring medical attention over the remaining days in May, would I have the option to enroll in COBRA for retroactive benefits, then switch to ACA plan on 6/1 since I will still be in the 60 day SEP window?
I’m trying to figure out the best way to cover the 12 day gap remaining in May before ACA coverage would begin. Thank you!
yes, you could sign up for ACA starting 6/1 and enroll in COBRA retroactively if something happens