COBRA or a Marketplace plan?

When you leave a job you are handed a COBRA election notice. It is thick, it has a deadline, and it does not mention that there is an alternative.

There is. This is the comparison, including the asymmetry at the end that makes the order of decisions matter.

What each one is

COBRA continues the exact plan you already had. Same network, same deductible, same card. What changes is who pays: you take on the full cost, including the portion your employer was covering, usually plus an administrative charge. People are routinely shocked by the first invoice, because they had never seen the true cost of their coverage.

A Marketplace plan is a new plan bought through HealthCare.gov, with a new network and a new deductible — and, for a great many households, a premium tax credit reducing what you pay each month.

The five questions that settle it

1. What do the two actually cost you? Not the sticker prices. COBRA’s real monthly cost against the Marketplace premium after your credit. Because the credit is based on your expected income — which has just changed — this comparison is frequently nothing like what people assume.

2. Are you part-way through treatment? If you are mid-course with a specialist, mid-way through a procedure, or managing something complex, COBRA’s continuity has real value. Changing plans mid-treatment means new authorisations and possibly new clinicians.

3. How much of your deductible have you already met this year? If you are most of the way to the out-of-pocket maximum on the employer plan, starting again at zero on a new plan in October is expensive. Early in the year, this argument disappears.

4. Are your doctors in the Marketplace plans available in your county? In rural counties this is the question that decides it, not the price. Check by name, with the practice’s billing office.

5. How long do you need it for? If a new job starts in six weeks with coverage from day one, a short stretch of COBRA is simple. If this is a longer transition or a permanent change, the Marketplace is usually the sustainable answer.

The asymmetry — read this before electing

Dropping COBRA voluntarily does not generally open a Marketplace enrollment window. Running out of COBRA does.

So the order matters:

• Compare before you elect COBRA. The loss of employer coverage opens a sixty-day Marketplace window, and that is the moment you have the free choice.
• If you elect COBRA and then find it unaffordable, you may be waiting until the next Open Enrollment. That is the trap, and it catches people who elected COBRA as a default because it was the only option in the envelope.
• When COBRA is exhausted at the end of its term, that opens a window in its own right.

There are limited exceptions and the rules have detail. The safe practice is simple: do the comparison in the first fortnight.

A quiet advantage of the Marketplace

A Marketplace plan follows the household rather than the job. If work is uncertain, that matters: the plan does not end when the next arrangement does, and the credit adjusts as your income changes if you report it.

For someone moving into self-employment, that is usually the deciding factor.

What to have to hand

The COBRA election notice, with its cost and its deadline. Your expected household income for the rest of this year and for next. Your list of doctors and medications. The date your employer coverage actually ends.

Half an hour with those five things settles it, and it is a much better half hour than the one spent regretting a default.

Where to get help

HealthCare.gov shows every Marketplace plan available where you live with your credit applied, free. The Marketplace Call Center is on 1-800-318-2596, TTY 1-855-889-4325, at any hour. Navigators and certified application counselors help in person, free, and are not paid by insurance companies — localhelp.healthcare.gov.

We will run the comparison with you at no cost, including the case where COBRA turns out to be the better answer. It happens, and we would rather say so than sell you something.