ACA vs COBRA in Arizona: which costs less after a job

When you leave a job, COBRA lets you keep your employer's health plan, usually for up to 18 months, but you pay the full premium plus up to a 2% administrative fee. A Marketplace plan on HealthCare.gov, Arizona's Marketplace, may cost far less if your income qualifies for a premium tax credit. COBRA tends to make sense when you have already met your deductible, are in the middle of treatment, or need a specific doctor for a short time. The Marketplace usually wins when your income drops after leaving work. You have 60 days to make the Marketplace choice, so compare both before the window closes.

How COBRA works

COBRA is a federal law that applies to group health plans from employers with 20 or more employees. When you lose coverage because you leave a job, have your hours cut, divorce, or age off a parent's plan, the plan must offer you the chance to keep the same coverage.

You usually have 60 days from the date of the COBRA notice, or the date coverage ends if later, to elect it. If you elect it, coverage is retroactive to the day your old coverage ended, which is why some people wait to see if they need it. Coverage for a job loss normally lasts up to 18 months, and up to 36 months for some family members in other situations.

COBRA is usually expensive because your employer was paying a large part of the premium while you worked. Under COBRA you pay both shares, plus up to 2% for administration. Many people are surprised when they see the first COBRA notice, so it is worth asking HR for the COBRA rate before your last day.

Side by side

When COBRA usually makes sense

• You have already met most of this year’s deductible or out-of-pocket maximum.
• You or a family member is in the middle of treatment, a pregnancy or a planned surgery.
• You need a doctor or hospital that is not in any Marketplace network near you.
• You only need a month or two until new employer coverage starts.
• Your income for the year is above 400% of the poverty level, so no credit is available.

When a Marketplace plan usually wins

Your Marketplace credit is based on income for the whole calendar year, including what you earned before leaving the job. If you leave mid-year after a high-earning stretch, run the estimate carefully, because the 2026 credit stops above 400% of the poverty level.

If you are self-employed after leaving a job, remember that your Marketplace income is your net business profit, not your gross revenue, which can make a meaningful difference to your credit.

• Your income for the year will drop enough to qualify for a premium tax credit.
• Your employer paid a large share of the premium, so the full COBRA price is a shock.
• You need coverage for longer than 18 months, for example until Medicare at 65.
• Your doctors are in a Marketplace network and you have not used much care this year.

The trap: dropping COBRA mid-year

If you choose COBRA and then decide to drop it partway through the year to save money, that does not open a special enrollment period. You would have to wait for Open Enrollment, November 1 to January 15 for 2027 coverage, unless another qualifying event comes along. When COBRA runs out on its own after 18 months, that does count, and you can move to a Marketplace plan then.

So the decision you make in the first 60 days matters more than it looks. Make the comparison once, carefully, and choose.

Write the deadlines down the day you receive your COBRA notice: the last day of employer coverage, the last day to elect COBRA, and the last day of your 60 day Marketplace window. They are close together but not identical.

Small employers in Arizona

If your employer had fewer than 20 employees, federal COBRA may not apply. Some states have their own continuation rules for small group plans. Ask your employer or the plan in writing what continuation, if any, is available, and if the answer is none, the Marketplace is likely your main option. The Arizona Department of Insurance and Financial Institutions can answer questions about state insurance rules.

Run the numbers in four steps

Compare the totals, not just the premiums. A Marketplace plan with a low net premium but a fresh deductible can still cost more for the rest of the year if you are in the middle of expensive treatment. The reverse is just as common: families who could have saved hundreds a month stay on COBRA because nobody showed them the Marketplace numbers.

• Get the COBRA premium from your employer’s notice, for everyone who would be covered.
• Estimate your household income for the full calendar year, including what you already earned.
• Check HealthCare.gov for your premium tax credit and the net price of plans that include your doctors.
• Add how much you would still owe toward a deductible under each option for the rest of the year.

A family example

Consider a Gilbert family of four where one parent leaves a job in August 2026 after earning most of the year’s income. Their total 2026 income is projected above 400% of the poverty level for four, which is $128,600 for 2026 coverage, so no premium tax credit is available this year. If they have already met much of their deductible, COBRA through December may make sense.

For 2027, their income picture changes. During Open Enrollment, November 1, 2026 to January 15, 2027, they can move to a Marketplace plan with a new income estimate. If their expected 2027 income falls below $132,000, the 400% figure for a family of four for 2027 coverage, they may qualify for a credit. Sequencing the two choices this way can capture the advantages of both.

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The bottom line

COBRA buys you sameness. The Marketplace often buys you savings. The right answer depends on your income, your deductible and your doctors. Visit our Individual and Family Health page, or try the ACA vs COBRA calculator on our tools page, then call Viola at (480) 300-5776 within your 60 days so the choice is made with your real numbers.