The election packet arrives a week or two after your last day, and the number inside is the part nobody warns you about. Same plan, same card, same doctors - and a monthly cost that has multiplied. So is COBRA worth it, or are you paying a premium for the comfort of not changing anything? The answer turns on three things: how much of this year's deductible you have already spent, what your household income will look like for the full year, and how long you need the coverage to last. Here is how to work them out - plus the deadline that quietly removes the choice if you take the steps in the wrong order.
What COBRA is, and why it costs what it does
COBRA is not a new plan. It is a federal right to keep the exact group coverage you already had, at your own expense, after an event that would normally end it - a layoff, a resignation, a cut in hours, or aging off a parent's or spouse's plan. It generally applies to employers with 20 or more employees, and many states have parallel 'mini-COBRA' rules covering smaller ones. The standard continuation period is 18 months after a job loss or reduction in hours; events such as divorce or a dependent aging out can extend it to 36 months for the family members affected.
Nothing about the plan got more expensive. What changed is who pays. Employers typically cover a substantial share of the premium, and that contribution stops with the job. COBRA lets the plan charge you the full cost - the employer's former share plus yours - and add an administrative load, capped by law at 102% of the plan's total cost. The sticker shock is not a penalty; it is the first time you have seen what your coverage actually costs. Which means the right comparison is never COBRA versus what you used to pay. It is COBRA versus what else you can buy right now.
The argument for COBRA most people miss
The strongest case for COBRA has nothing to do with premiums: your deductible and out-of-pocket maximum carry over.
Leave a job in September having already spent most of your deductible, and any brand-new plan - Marketplace, spouse's, anything - starts you back at zero for the rest of the year. Every dollar of progress resets. COBRA is the only option that preserves it, because it is not a new plan at all. For someone mid-treatment, or simply midway through an expensive year, that carried-over balance can outweigh a much higher premium for the months remaining. Our breakdown of how deductibles and out-of-pocket maximums work is worth reading first, because the reset is where the real money usually hides.
The same logic covers your network and prescriptions. COBRA guarantees continuity - the same doctors, the same drug list, the same prior authorizations already approved. A new plan guarantees none of it, and checking takes real work; see our guide to in-network versus out-of-network care.
The change that rewrote the usual advice
For years the standard guidance was simple: skip COBRA, buy a Marketplace plan, take the subsidy. That advice is now conditional, and the condition is income.
The enhanced premium tax credits in place since 2021 expired at the end of 2025 and have not been restored. The practical effect is the return of what is often called the subsidy cliff: above roughly four times the federal poverty level for your household size, premium tax credits drop to zero rather than tapering off. Below that line, subsidies still exist and can be substantial. Above it, you pay the full premium, and a Marketplace plan loses much of its price advantage over COBRA.
This is why severance can flip the answer. Severance generally counts as income, and a lump sum can carry a household over the threshold for the year even after the paychecks stop. These thresholds are adjusted annually and the rules are genuinely intricate, so confirm your own figures with a licensed agent or tax professional rather than estimating - this is the input most likely to change the decision.
The 60-day window, and the one-way door inside it
You generally have 60 days from the later of the qualifying event or the date your election notice is sent to elect COBRA, and 45 days after electing to make the first payment. Coverage is retroactive to the day the old plan ended, so electing on day 55 still covers a claim from day 3.
That retroactivity buys thinking time - stay healthy, line up other coverage, and you can decline and owe nothing. But treat it as a decision window, not a plan: go past day 60 uninsured and a serious claim on day 61 has no backstop, as our guide to going without coverage sets out.
Here is the part that catches people. Losing job-based coverage opens a Marketplace special enrollment period, generally 60 days. Electing COBRA does not extend it. Once that window closes, dropping COBRA because it turned out to be expensive is usually not itself a qualifying event - you would typically wait for open enrollment to switch. Exhausting COBRA at the end of its term does qualify, and so does an employer ending a promised premium contribution, but simply changing your mind does not. Our comparison of open enrollment and special enrollment periods covers which events open a window.
So price both options during the 60 days, not after. One reassurance worth stating plainly: merely being offered COBRA does not disqualify you from premium tax credits. You can decline it and still claim a subsidy you qualify for on income.
When COBRA is worth it, and when it isn't
The decision sorts cleanly once you stop comparing monthly premiums and start comparing total cost - premium plus expected out-of-pocket - across the months you actually need.
- COBRA usually wins when you are well into your deductible or out-of-pocket maximum, when you are mid-treatment or see specialists you cannot risk losing, when your income puts you above the subsidy threshold, or when you need a bridge of a month or two before new employer coverage starts.
- A Marketplace plan usually wins when your income will genuinely qualify you for a premium tax credit, when your deductible is barely touched, when you need coverage for longer than COBRA's 18 months, or when a different network is an acceptable trade for a materially lower premium.
- To run the numbers: take the COBRA premium and end date from your election notice, look up what you have already paid toward this year's deductible in your insurer's portal, estimate household income for the full calendar year including severance, then price comparable Marketplace plans and check each network and drug list against your own doctors and prescriptions by name. Our seven-step plan selection checklist and explainer on metal tiers cover comparing total expected cost rather than premium alone.
- Also worth checking: a spouse's employer plan, which a job loss typically opens an enrollment window for; a parent's plan if you are under 26; and Medicaid or CHIP, which have no enrollment window and are assessed on current monthly income - a distinction that matters a great deal after a job ends.
The bottom line
COBRA is expensive because it is honest about what coverage costs, not because it is a bad deal. It is the right answer more often than its reputation suggests - late in a plan year, mid-treatment, or above the subsidy threshold - and the wrong answer when a subsidy is genuinely available and your deductible has barely moved. The costliest mistake is not choosing wrong; it is letting the 60 days pass without pricing both and discovering in March that the choice was made for you.
If you have an election notice in hand, the comparison is worth an hour and you do not have to run it alone. A licensed agent can price what is actually available where you live against your income, your household and your doctors at no cost to you - get a personalized quote and decide with both numbers in front of you. Subsidy thresholds, continuation periods and enrollment deadlines are set by rule, adjusted annually, and some are affected by ongoing litigation, so confirm the exact figures for your own situation with a licensed agent or tax professional.