COBRA vs. Marketplace Coverage After Leaving a Job to Go Self-Employed

Losing job-based coverage triggers a Special Enrollment Period

Leaving a job and losing employer-sponsored health coverage qualifies as a life event that opens a 60-day Special Enrollment Period for the ACA Marketplace, regardless of whether it's currently Open Enrollment. This means you don't have to wait for the standard enrollment window to get Marketplace coverage in place -- but you do need to act within that 60-day window to avoid a coverage gap.

COBRA lets you keep the exact same plan, at full cost

COBRA continuation coverage lets you keep your former employer's exact health plan and network for a limited period, typically up to 18 months, but you're responsible for the full premium the employer previously subsidized, plus often a 2% administrative fee. For many people, this means COBRA premiums are significantly higher per month than what the same coverage cost as an active employee.

The Marketplace is usually cheaper once a subsidy is factored in

Because COBRA doesn't come with a premium tax credit, while an ACA Marketplace plan generally does if your projected income as a newly self-employed person qualifies, the Marketplace option is often meaningfully cheaper on a monthly basis -- even though it typically means switching to a new plan and possibly a different network. Run an actual Marketplace quote before defaulting to COBRA just because it's the more familiar, lower-effort choice.

You can switch later if COBRA turns out to be the wrong call

Electing COBRA doesn't lock you in indefinitely. If you later decide a Marketplace plan makes more sense, losing or dropping COBRA coverage can itself trigger another Special Enrollment Period in some circumstances -- though the rules here are specific enough that it's worth confirming your exact situation with a licensed agent rather than assuming you can switch freely at any point.

Before you request a quote

• Confirm your exact COBRA premium quote from your former employer's plan administrator.
• Get a real Marketplace quote to compare against it, factoring in your projected self-employment income.
• Note the date your employer coverage actually ends, since your 60-day Special Enrollment window starts from that date.
• Flag any ongoing treatment or mid-course care that makes network continuity a priority.

What COBRA doesn't automatically include

COBRA continues your exact former plan, but it doesn't come with any new premium tax credit or subsidy the way a Marketplace plan generally does. It also doesn't extend indefinitely -- coverage typically runs out after 18 months (longer in some specific circumstances), at which point you'd need to shop for new coverage anyway. Some people treat COBRA as a short-term bridge while getting a new business established, then move to a subsidized Marketplace plan once their self-employment income picture is clearer. This bridge approach can make sense if you're mid-treatment or want a few months of stability before shopping seriously, as long as you're tracking the COBRA coverage end date so you don't lapse into a gap.