COBRA vs ACA: health insurance after a layoff

The short answer

• Income decides it. If your household income for the year is no more than 400% of the federal poverty line ($62,600 for one person in 2026, $128,600 for a family of four), you can get a premium tax credit and the Marketplace plan is often cheaper than COBRA.
• Above that line there is no credit. A Marketplace plan then costs its full price, and COBRA, which keeps your doctors and deductible, can be the better value.
• Very low income: in a state that expanded Medicaid, adults up to 138% of the poverty line can qualify for Medicaid. Check this first.
• Do not wait on the deadlines. You have 60 days to elect COBRA and 60 days after coverage ends to join a Marketplace plan. The two windows run at the same time.

COBRA and the Marketplace, side by side

Who should pick which

1. 1. Is your income for the whole year very low?

   In one of the 41 states and DC that expanded Medicaid, an adult up to 138% of the poverty line ($22,025 a year for one person in 2026) can qualify for Medicaid. Apply first; it can cost nothing. In the 10 states that have not expanded, adults below 100% of the poverty line generally get neither Medicaid nor credits.

2. 2. Is your income at or under 400% of the poverty line?

   Then a Marketplace plan with a credit is worth pricing. At the lower end of that range the credit can cover most of the premium. Compare it with your COBRA quote in the calculator.

3. 3. Is it over 400%?

   There is no credit, so compare COBRA with the full Marketplace price. COBRA keeps your doctors and your deductible, which matters most if you are mid-treatment or have met your deductible this year.

4. 4. Will your income change a lot this year?

   The credit uses your income for the whole year, including pay you already earned, severance and unemployment benefits. Estimate the year, not the weeks since the layoff, and report changes when you start a new job.

5. 5. Do you expect a new job with coverage soon?

   Once you elect COBRA and make the first payment, coverage is back-dated to the day your job-based coverage ended, so there is no gap. A new employer plan has its own start date and waiting period; ask your new employer and your COBRA plan administrator how the two line up before you decide.

The deadline clock

• Day 0: your job-based coverage ends. Your employer must send a COBRA election notice.
• Day 60: last day to elect COBRA (counted from the later of day 0 and the date you get the notice), and last day to join a Marketplace plan outside open enrollment (counted from day 0).
• 45 days after you elect: your first COBRA payment is due. Coverage is back-dated to day 0.
• 30 days after you pick a Marketplace plan: last day to send proof that you lost job-based coverage.

The 2026 and 2027 numbers

The credit for a coverage year uses the federal poverty guidelines published for the year before it, because that is what was current when open enrollment began. Above 400% of the poverty line there is no credit.

Contiguous states and DC. Alaska and Hawaii use higher guidelines; the calculator uses them.

What the IRS expects you to pay for the benchmark plan

The credit is the benchmark plan’s price minus this share of your income. Source: IRS Rev. Proc. 2025-25 (2026) and Rev. Proc. 2026-26 (2027), section 3.01. For 2021 through 2025 Congress had removed the 400% cap; it is back in both tables. The affordability line for employer coverage is 9.96% for 2026 and 10.22% for 2027.

COBRA vs ACA in your state

The average second-lowest-cost silver plan for a 40-year-old costs $625 a month across the country in 2026 and ranges from $401 to $1299 by state. Pick yours for its Medicaid status, marketplace and average premium.

Questions people ask

Is COBRA or the ACA Marketplace cheaper?

It depends mostly on your income. COBRA costs the whole premium: your share, your employer's share and up to 2% on top (up to 102% of what the plan costs). A Marketplace plan costs less if your household income is low enough to get a premium tax credit, which for 2026 and 2027 means no more than 400% of the federal poverty line. Above that line there is no credit and the Marketplace plan costs its full price. Use the calculator with your own COBRA quote.

How long do I have to choose COBRA?

You have 60 days, counted from the later of the day your coverage ends and the day you get your COBRA election notice. If you elect, your first payment is due within 45 days of electing, and coverage is back-dated to the day your job-based coverage ended.

How long do I have to join a Marketplace plan after losing my job?

60 days after your job-based coverage ends. If you pick a plan before your coverage ends it can start the first day of the month after you lose coverage. If you pick after, it starts the first day of the month after you pick. You then have 30 days to send documents showing you qualify.

Can I take COBRA and switch to the Marketplace later?

Only at open enrollment, or if COBRA coverage ends. Cancelling COBRA yourself before it ends does not open a special enrollment window. People who want to try COBRA first and move later should know that the Marketplace window tied to losing job-based coverage is the 60 days after it ends.

Can I get a Marketplace credit if I am on COBRA?

Generally not for the months you are enrolled in it. The IRS treats enrolling in employer coverage as ruling out the credit, and COBRA is employer coverage. You can decline COBRA and apply for the credit instead.

Did the enhanced ACA subsidies expire?

Yes for the rules in the IRS tables for 2026 and 2027. The temporary rules for 2021 through 2025 removed the 400% of poverty cap; the IRS tables for 2026 and 2027 (Rev. Proc. 2025-25 and 2026-26) have the cap back. Congress could change this, so check the IRS page linked under Sources before you decide.

Do unemployment benefits and severance count as income for the credit?

Yes. The credit is based on your income for the whole year in which you need coverage, which includes pay you have already earned this year, severance and unemployment compensation (the IRS treats unemployment compensation as taxable income). Estimate the whole year, not your income since the layoff.

What if I have little or no income after the layoff?

In a state that expanded Medicaid, adults up to 138% of the poverty line can qualify for Medicaid, which is decided on your income this month and can be applied for at any time. In the 10 states that have not expanded, adults below 100% of the poverty line generally get neither Medicaid nor Marketplace credits.

Sources

Every rule and figure on this page was read from the sources below on October 26, 2026. Insurance and tax rules change, so check the linked pages for the current version before you decide.