Why is COBRA so much more expensive than health insurance was while employed?

Because the employer's premium contribution — often 70-80% of the total cost — disappears the moment employment ends. COBRA requires paying the full combined premium (employee plus former employer share) plus up to a 2% administrative fee, where before only the employee's smaller share came out of each paycheck.

Is a subsidized ACA marketplace plan always cheaper than COBRA after a job loss?

Often, but not always — it depends on the household's expected income for the rest of the year, which determines the subsidy amount. A significant income drop after job loss usually means a larger subsidy and a cheaper marketplace premium, but a household with substantial severance or a working spouse might see little to no subsidy, in which case COBRA can still be the cheaper, simpler option.

How much is the COBRA administrative fee?

Up to 2% of the total premium, capped by federal law (29 U.S.C. §1162) — some employers charge less, but 2% is the maximum and a safe number to assume when estimating COBRA's actual monthly cost.

What's the deadline to elect COBRA coverage?

Typically 60 days from the date of the COBRA election notice (or the date coverage would otherwise end, whichever is later). This deadline is strict and doesn't extend for comparison shopping — don't let it lapse while deciding between COBRA and a marketplace plan.

COBRA's Full Premium Plus 2% Fee Costs $1,812 More Than a Subsidized Marketplace Plan

We ran a common post-layoff scenario through the calculator: a $650/month combined employee-and-employer premium, bridging a 4-month gap until new employer coverage starts. COBRA’s actual monthly cost — the full premium plus its 2% administrative fee — comes to $663, or $2,652 for the full bridge period. A marketplace plan, re-priced using the household’s now-lower expected annual income, comes in at $210/month after subsidy — $840 total. The marketplace plan saves $1,812 here, almost entirely because losing a job usually also means losing the income level that determined the household’s prior, unsubsidized health costs.

Same coverage need, two very different price tags

	COBRA	Marketplace (subsidized)
Base monthly premium	$650	—
Fee/subsidy adjustment	+2% admin fee	Income-based subsidy applied
Actual monthly cost	$663	$210
Months needed	4	4
Total bridge cost	$2,652	$840
		$1,812 saved

The premium itself didn’t change between the two options — what changed is who’s paying which share of it, and whether the household’s post-layoff income qualifies for a meaningful subsidy.

Why the sticker shock isn’t really about COBRA

It’s easy to blame COBRA itself for feeling expensive, but the mechanism is simpler than it looks: while employed, the employer typically covers 70-80% of the total premium, and only the smaller employee share shows up as a payroll deduction. COBRA doesn’t add much on top of the real cost — the 2% administrative fee is a modest markup — it just removes the employer subsidy that was always the bulk of the actual price. The “COBRA is expensive” reaction is really “the full, unsubsidized cost of health insurance is expensive,” which was true the whole time, just invisible on a pay stub.

Where this framework breaks

Mid-treatment care with a specific provider. COBRA keeps the exact same plan and network — losing access to an in-progress treatment or specialist by switching plans has value beyond the premium difference.
Household income for the rest of the year is uncertain. The marketplace subsidy reconciles against actual annual income at tax time — underestimating income to get a bigger subsidy can mean owing money back later.
Substantial severance or a working spouse. A household without a significant income drop may see little to no marketplace subsidy, in which case COBRA can still be the simpler, competitive choice.
The 60-day election window doesn’t wait for this comparison. COBRA election deadlines are strict — don’t let the window lapse while deciding.

What to actually do

Get the actual subsidized marketplace premium at healthcare.gov using realistic remaining-year income, not last year’s.
Check the COBRA election notice for the exact combined premium and the administrative fee the specific plan charges.
Compare deductibles and networks side by side, not just the monthly premium.
If mid-treatment with a specific provider, weigh continuity of care seriously against the cost difference.
Don’t let the comparison delay the decision past the COBRA election deadline.

For what an actual medical event would cost under either plan, see the medical cost estimator’s deductible, coinsurance, and OOP max walkthrough, and for whether savings can absorb the coverage cost during the bridge period, see why disability is more likely than death before 65 for the broader risk-resilience framing.

Open the COBRA vs Marketplace Calculator → and run your own premium, bridge period, and subsidized rate.