COBRA vs Marketplace Calculator

The number that shocks people who have just lost a job is not really a price increase. It is the first time they have seen the actual price.

While employed, your payroll deduction covered a fraction of your health plan — the employer paid the rest, invisibly. COBRA lets you keep exactly the same coverage, but now you pay the whole premium, plus an administrative load of up to 2% that the statute permits.

Using this calculator's defaults: a $200 monthly payroll deduction against an $800 employer contribution means a real premium of $1,000. Add the 2% load and COBRA costs $1,020 per month — more than five times what was coming out of your paycheque, for identical coverage.

The alternative worth checking is a marketplace plan, and the reason it is often dramatically cheaper is structural: COBRA's price ignores your income entirely, while the marketplace premium tax credit is calculated from it. Losing a job usually lowers annual income, which usually raises the credit. That is why the answer frequently flips after a job loss even though the plans themselves have not changed.

Everything runs in your browser. Nothing you type is sent to a server, and there is no signup.

You can find the full premium on your W-2 in Box 12, code DD (that figure is annual — divide by twelve), or by asking HR directly.

How long COBRA runs depends on the qualifying event, per 29 U.S.C. § 1162:

COBRA applies to employers with 20 or more employees. Below that threshold, many states have "mini-COBRA" continuation laws with their own rules — check your state insurance department.

This is an estimate for planning, not an insurance quote. Actual pricing is set by the insurer or, in promulgated-rate states, by the state regulator.

You have 60 days from the later of your coverage-loss date or your election notice to elect COBRA. Losing job-based coverage separately opens a 60-day special enrollment period on the marketplace.

Here is the useful thing about the COBRA window: coverage is retroactive to the date you lost it. You can decline to elect, shop the marketplace, and only elect COBRA if you actually incur a claim during those 60 days. The bill arrives retroactively and the claim is covered.

And here is the trap that catches people. Voluntarily dropping COBRA later does not create a marketplace special enrollment period. Only exhausting it does — running out the full 18 or 36 months. If you elect COBRA and then decide three months in that it is unaffordable, you may be stuck paying it until open enrollment.

The practical order of operations: run the numbers during your 60-day window, before either deadline expires. Use the ACA subsidy calculator to size the credit against your new, lower expected annual income.

Cheaper is not always better here. COBRA wins in several situations that a price comparison alone will miss:

• You are mid-treatment. Changing plans means changing networks, and possibly changing oncologists, surgeons or specialists mid-course.
• You have already met your deductible. A new plan resets it to zero. If you are $6,000 into a deductible in September, switching can cost more than the premium difference saves.
• Your family is spread across providers. Marketplace networks are frequently narrower than employer plans, and finding one that covers everyone's existing doctors is not always possible.
• You expect to be re-employed quickly. For a two-month gap, continuity is usually worth more than the savings.

And one asymmetry worth knowing: your income estimate for marketplace purposes covers the whole calendar year. If you lose a job in November, your annual income is probably still high and the credit small — but in January it resets, and the calculation can change completely. It is worth re-running then.