Your Health Insurance Options: COBRA vs. Obamacare
When you lose access to employer-sponsored health insurance, you face an important decision: do you keep your current health plan through COBRA or look for something new? It all depends on your budget and the kind of care you need. We’ll walk you through the details!
What is COBRA Insurance?
If you quit or are terminated from your job, you may be offered COBRA coverage by your employer. COBRA allows you and your family to stay enrolled in the same health insurance you had while you were employed. The catch? Unless your employer offers a subsidy, you will now have to pay for the full monthly premium, plus an administrative fee. Typically, this means your plan will be much more expensive than you’re used to. COBRA coverage lasts for up to 18 months (plus an additional 11 months if you’re disabled).
How to Sign Up For COBRA
Within 45 days of losing your employment, you will receive a COBRA election notice from your employer. This is a form with details about your plan options and prices. You must complete the form and return it to your employer to start your COBRA coverage.
It’s important to note that you have 60 days from when you receive your election notice (or from when you lose your coverage, whichever is later) to decide if you would like to enroll in COBRA.
The Pros and Cons of COBRA Plans
| Pros | Cons |
|---|---|
| Keep the benefits you’re used to. If you used your job-based insurance regularly for certain medical services or to visit your favorite healthcare providers, COBRA offers the peace of mind that your health plan details haven’t changed. |
Expensive monthly premiums. When you sign up for COBRA, you pay for an employer-sponsored plan, without any contributions from your employer. On average, health plans are about four times more expensive through COBRA than when employers help pay for them. |
| Avoid coverage gaps. COBRA coverage backdates. As long as you sign up within your 60-day window, you’ll be covered for any time you spend deciding what type of insurance you want. Keep in mind that you’ll still need to pay premiums for any months you miss. |
Strict payment policy. If you miss a payment, you have a 30-day grace period to pay up. As soon as that period ends, your coverage will be canceled and you will not be able to re-enroll. |
| No flexibility to change your mind. Once you enroll in COBRA, you can only switch to a Marketplace plan once your coverage ends after 18 months (or if it’s Open Enrollment) or if your former employer stops financially contributing to your COBRA coverage. |
What is a Marketplace plan?
Losing job-based health insurance qualifies you for a Special Enrollment Period. This means that you are eligible to enroll in any insurance plan sold on Healthcare.gov or your state’s health insurance marketplace (e.g. Covered CA). Marketplace plans are also sometimes called Obamacare or ACA (Affordable Care Act) plans. These individual health plans are typically much less expensive than COBRA plans, especially if you qualify for a subsidy! To qualify for a subsidy for your Marketplace coverage, you can’t also be enrolled in COBRA or any other type of qualifying coverage. If you’ve already enrolled in COBRA, you may qualify for a subsidy for your Marketplace coverage as long as you drop your COBRA coverage before your Marketplace plan starts.
How to Sign Up for a Marketplace Plan
If you want a Marketplace plan, you must apply within 60 days from when your employer-sponsored coverage ends. Once you enroll, your health insurance will typically kick in on the first day of the following month. It’s to your benefit to apply as soon as possible so you can avoid a gap in coverage.
You can explore available Marketplace plans for free right here on Stride (we’ll even recommend the options that will save you the most money). Depending on your state, you will then enroll through directly on Stride for a Healthcare.gov plan or on your state’s insurance marketplace. Don’t worry! We can guide you through the application process.
Enter your zip code below to get started.
How to Choose a Marketplace Plan
All Marketplace plans provide no-cost preventive care, including annual checkups and important health screenings. They are also legally required to cover Essential Health Benefits. This means they must help pay for certain services like lab work, prescription drugs, and hospitalizations. However, every plan will cover these benefits differently.
We recommend making a list of your (and your family’s) medical conditions, prescriptions, and favorite doctors. Consider this information as you review different plan details, such as:
Network: A network is the type of access your plan offers to doctors, specialists, and healthcare facilities. Some plans will cover you if you see a provider outside your network and others won't. If you have a favorite doctor, you’ll want to call and verify that they are in-network for the plan you’re considering. If you visit specialists often, you may want to explore plans with more flexible networks. Learn more here.
Deductible: A deductible is the amount of money you have to pay out-of-pocket for health care before your insurance will help cover the cost. If you only need health insurance for emergencies and don’t use care often, a less expensive high-deductible plan may be a great option. Learn more here.
Metal Tier: Health insurance companies organize their plans by metal tiers (bronze, silver, gold, and platinum) to represent different price points and coverage amounts. If you use medical care often or if you need regular prescriptions, you may want to search for a plan in a higher metal tier. Learn more here.
Stride Tip → If you search for your plan options on Stride, you can enter your medical conditions, prescriptions, and healthcare team, and we’ll help you find the plan option that works best.
The Pros and Cons of Marketplace Plans
| Pros | Cons |
|---|---|
| Flexible plan options. When shopping for a Marketplace plan, you have the flexibility to find the option that best suits your family’s financial and medical circumstances. |
Your care may change. With a new health plan comes new plan details. You may not have the same access to healthcare services and providers that you did before. Depending on your plan, you may also be expected to pay more for your care than you're used to. |
| Eligibility for savings. Depending on how your income has changed, you may be eligible for a health insurance subsidy. This is money the government pays towards part or all of your health coverage. You could pay as little as $1 a month for a Marketplace plan! |
You may experience a coverage gap. Marketplace plans don’t backdate coverage like COBRA does. If you take extra time to decide which type of plan you want, you may go without health insurance for a month or two. |
| Longer grace periods. If you have a subsidized Marketplace plan (and as long as you’ve paid at least one month’s premium), you’ll be eligible for a 90-day grace period. This offers some extra flexibility if you ever need a little extra time to make up a payment. More details here. |
You have to do more work. Shopping for a new health plan takes extra time and effort. Fortunately, we can help make the process easy! |
Still on the fence about which coverage option is best for your family? Need help deciding on a Marketplace plan? Head here for answers to your questions.
Or, find plans near you so you can compare them to your COBRA benefits. Enter your zip code below to get started.
