COBRA's 2% Fee vs a Subsidized Marketplace Plan: $1,812 Saved Over 4 Months

Why COBRA’s sticker price shocks people right after a job loss

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 cost — the full premium plus its 2% administrative fee — comes to $663/month, or $2,652 for the 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 that determined the household’s prior (unsubsidized) health costs.

The reason COBRA feels so much more expensive than it did as an employee isn’t really about COBRA at all — it’s that the employer’s premium contribution, often 70-80% of the total cost, simply disappears. What used to be a payroll deduction quietly covering a fraction of the real premium becomes the full sticker price the moment employment ends.

How the math works

COBRA monthly cost = full combined premium × 1.02 (the 2% administrative fee cap under 29 U.S.C. §1162). Total COBRA cost = COBRA monthly cost × months needed. Total marketplace cost = subsidized monthly premium × months needed. The marketplace premium is taken as a direct input — look up your actual subsidized rate at healthcare.gov using your expected income for the rest of the year, since the premium tax credit is a sliding scale tied to income as a percentage of the federal poverty line and changes with legislation.

Math runs locally. Inputs never leave your browser. Source on github.

Where this calculation doesn’t apply

• Mid-treatment care with a specific provider. COBRA keeps the exact same plan and network — if switching plans means losing access to an in-progress treatment or specialist, that continuity has value beyond the premium difference.
• Household income for the rest of the year is uncertain. The marketplace subsidy is reconciled against actual annual income at tax time — underestimating income to get a bigger subsidy can mean owing money back later.
• The 60-day COBRA election window matters regardless of cost. COBRA election deadlines are strict and don’t wait for this comparison — if there’s any chance of choosing COBRA, don’t let the decision window lapse while comparing options.
• Marketplace plans can have higher deductibles. A cheaper premium sometimes trades off against a higher deductible or narrower network — compare the whole plan, not just the monthly cost, before deciding.

What to actually do

1. Get your actual subsidized marketplace premium at healthcare.gov using your realistic remaining-year income, not last year’s.
2. Check the COBRA election notice for the exact combined premium and confirm the administrative fee your specific plan charges (up to 2%).
3. Compare deductibles and networks side by side, not just the monthly premium.
4. If mid-treatment with a specific provider, weigh continuity of care seriously against the cost difference.
5. Don’t let the comparison delay the decision past the COBRA election deadline — it’s strict and doesn’t extend for deliberation.