Is COBRA Worth It?

Short answer: COBRA is worth it for some people, but not most. If you retire early, COBRA lets you keep your old job's health plan for a while. But you pay the full price yourself. Often a Marketplace plan costs less. This page helps you see which one fits you.

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What does COBRA cost?

COBRA lets you keep your old job's health plan for up to 18 months after you leave. The catch is the price. While you worked, your employer paid a big part of your premium. With COBRA, you pay the whole thing. You also pay a small fee of up to 2%.

This makes COBRA expensive. For one person it is often well over $700 a month. For a couple it can be much more. The plan stays the same. The price does not. You are now paying the full group rate yourself, plus that 2% fee.

One key rule: you must choose COBRA within about 60 days after you leave your job. It is a one-time choice. You generally cannot start COBRA later if you skip it now. So decide fast.

When is COBRA worth it?

COBRA is usually worth it only when your income is too high to qualify for any Marketplace subsidy, or when you want to keep your exact plan for a short bridge to Medicare. Here are the main cases:

Your income is over the cliff. In a year when you earn too much for any help (more on this below), a Marketplace plan has no discount. COBRA may then cost about the same or less, while keeping the plan you know.
You want to keep your exact doctors and plan. If you are mid-treatment, or you love your current network, COBRA keeps everything the same for a short time.
You already met your deductible. If you paid most of your out-of-pocket max this year, a new plan would reset that to zero. COBRA keeps your progress.
You only need a short bridge. If you are close to 65, COBRA's 18 months may carry you right up to Medicare.

When is a Marketplace plan cheaper?

The Marketplace, also called Obamacare, sells health plans to people who do not get coverage from a job. Its big edge is the subsidy. A subsidy is help from the government that lowers your monthly cost. A Marketplace plan can cap your premium as a share of your income. COBRA cannot do this.

For most early retirees with low or medium income, a subsidized Marketplace plan is cheaper than COBRA. The lower your income for the year, the more help you get. Early retirees often control their income by choosing when to take money from an IRA, 401(k), or investments. That control can unlock a bigger subsidy.

One 2026 change matters a lot. The extra subsidies from past years ended on December 31, 2025. In 2026, the rules went back to the older sliding scale. The hard income "cliff" is back: if you earn more than 4 times the federal poverty line, you get no help at all. That is the one case where COBRA can win.

How to decide (a quick checklist)

Walk through these questions to find your answer:

What is your income this year? Low or medium income usually means a Marketplace plan with a subsidy wins. High income (over the cliff) means COBRA gets closer.
How long until Medicare? Medicare starts at 65 and ends this whole choice. If 65 is near, COBRA's 18 months may be a clean bridge.
Are you in the middle of care? If yes, COBRA keeps your exact doctors and plan with no break.
Did you already meet your deductible? If yes, COBRA avoids restarting it at zero for the rest of the year.
Did you do the math? Compare the real numbers side by side before you choose.

The fastest way to compare is to run your own numbers. COBRA is rarely the cheapest path for a low- or medium-income early retiree, but it can be the right call in a high-income year or as a short bridge to Medicare at 65.

Run your COBRA vs Marketplace comparison →

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This is an estimate to help you plan, not insurance or tax advice. See the disclaimer.