Updated August 3, 2026. Quick answer: COBRA is usually the more expensive of the two and almost always the less flexible, but it has one decisive advantage: it keeps your existing doctors and your existing deductible progress. The marketplace is usually cheaper — sometimes dramatically, if you are under the subsidy cliff — and you have 60 days to decide, which is enough time to price both.
What COBRA costs, and why it is a shock
By statute the premium may not exceed 102% of the applicable premium (29 U.S.C. 1162(3)) — the whole cost of the coverage plus two points for administration.
That is why it feels like a tenfold increase. The number on your payslip was only ever the employee share; your employer was quietly paying the rest. COBRA does not raise the price of your plan, it just stops hiding it.
How long it lasts
18 months for a termination or reduction in hours, extending to 36 months if a second qualifying event occurs inside that window (29 U.S.C. 1162(2)(A)). For a disability extension the premium cap rises from 102% to 150% after the 18th month.
For someone retiring at 63 and a half, 18 months lands almost exactly on Medicare. For someone retiring at 60, it runs out three and a half years early — which makes COBRA a bridge to nowhere unless the marketplace is the plan afterwards anyway.
If the separation was a layoff, the COBRA election clock runs from the later of two dates rather than your last day — the layoff deadline calendar computes it.
The 60-day window, and the retroactivity nobody mentions
The election period is at least 60 days, ending no earlier than 60 days after the later of coverage ending or your receiving the notice (29 U.S.C. 1165(a)(1)). And no premium can be demanded until 45 days after you elect (1162(3)).
Taken together those create something genuinely useful: you can wait, and if nothing happens you may never need to pay. Elect late and coverage is retroactive to the date it ended, so the gap closes behind you. People who are healthy and organised use the window deliberately; people who assume they must decide on day one pay for months they did not need.
Where the marketplace wins
- Price, if you are under the cliff. For 2026 the credit stops above 400% of the poverty line — work out which side you are on. Under it, the marketplace is frequently a fraction of COBRA.
- You choose the level. COBRA continues the plan you had; the marketplace lets you drop to a cheaper tier if the deductible matters less than the premium.
- It does not run out at 18 months.
Where COBRA wins
- Mid-treatment. Same network, same doctors, no re-authorisation.
- Deductible already met. Starting a new plan restarts it, which can swamp the premium difference late in a year.
- It cannot be underwritten. Coverage may not be conditioned on evidence of insurability (1162(4)).
- A very short bridge. Retiring three months before Medicare, the simplicity is often worth the money.
Two things that sit alongside this decision after a layoff. A health FSA does not follow the same clock — coverage generally ends at your last day even though the deadline to submit claims runs later, and continuing it is worth it only if the account is underspent. And if your employer offers retiree medical, eligibility is measured on your separation date, which can make the whole comparison moot — or make being weeks short extremely expensive.
How to actually decide
Get the COBRA figure in writing — the notice states it. Price the marketplace with your real expected MAGI, not last year’s income, because the subsidy is what changes the answer. Then check the deductible you have already met this year and how many months you need to cover. Do it inside the 60-day window and you lose nothing by taking the time.
Related: COBRA after divorce, which has its own timing trap · the 2026 cliff.
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Percentages are from IRS Rev. Proc. 2025-25 (the 2026 applicable percentage table); poverty guidelines from 90 FR 5917, which is the schedule used for 2026 coverage; statutory rules from 26 U.S.C. 36B and 29 U.S.C. 1162 and 1165, all read at source on August 3, 2026. This is an estimate of the benchmark calculation, not a quote, and it is not tax advice. If Congress restores the enhanced credits this page changes — check the date above.