Losing job-based coverage
When your job coverage ends, and COBRA is not your only option
Figures on this page checked . Medicare and marketplace numbers reset every year — if you are reading this long after that date, call and we will tell you what moved.
Sixty days each way, which is the part that matters
Losing job-based coverage opens a special enrollment period. It runs 60 days before your coverage ends and 60 days after — two separate windows, not sixty days in total.
Apply before the coverage stops
Starting the application while you are still covered is what lets the new plan begin the day the old one ends. Wait until the coverage has lapsed and you are choosing between a gap of a few weeks and paying for COBRA to bridge it.
You will need proof of the loss — a letter from the employer or the plan with the end date on it. Ask for it on your last day rather than a month later, when the person who would have written it has stopped answering your emails.
What COBRA costs once nobody else is paying
COBRA continues the plan you already have, for up to 18 months, at up to 102% of the full group premium.
That last figure is the shock. While you were employed your employer paid most of the premium and you saw only your share on a payslip. COBRA is the whole premium, plus an administrative charge on top, which is routinely several times the number you were used to seeing.
In plain terms
“Same plan, same doctors” is COBRA’s real advantage and it is a genuine one. Nothing changes: same network, same deductible, same progress toward it, same prescriptions covered. For somebody mid-treatment that continuity can be worth more than the premium difference.
Against that, a marketplace plan may come with a premium tax credit and Colorado Premium Assistance on top of it, and COBRA never does. For a household whose income just dropped because the job ended, that gap is usually large.
Grove Benefit Advisors, LLC is a certified broker with Connect for Health Colorado and is not a government agency or the marketplace itself. Plan availability, networks, and pricing vary by county. Any savings figure shown here is illustrative; final eligibility for a premium tax credit is determined by Connect for Health Colorado on your application.
When COBRA is the right answer
We would rather lose the sale than move somebody off coverage that is serving them. These are the situations where we say stay:
- Treatment already underway with a specialist, a surgery scheduled, or a pregnancy being managed by a particular practice.
- A deductible you have already met late in the plan year. Starting over in October is expensive arithmetic.
- A severance agreement where the employer keeps paying the premium for some months. If somebody else is paying, the comparison changes completely.
- A very short gap before new employer coverage starts, where the paperwork is worth less than the simplicity.
One caution on the third. If an employer stops contributing to your COBRA premium partway through, that itself opens a new special enrollment period. Losing a subsidy counts; deciding COBRA has got expensive does not.
Two ways people lose the window entirely
Both of these come from the same misunderstanding: that COBRA can be abandoned whenever a marketplace plan starts looking better.
- Dropping COBRA voluntarily. This is not a loss of coverage and opens no window. You wait for Open Enrollment.
- Stopping payment on COBRA. Losing coverage because you did not pay for it also opens no window, which leaves people uninsured with no way in until January.
Running COBRA to its natural end does open a window — exhausting it counts as losing coverage. So does an employer ending its contribution. The distinction is whether the coverage ended on its own terms or because you ended it.
Decide before you elect, not after
You have 60 days to elect COBRA and 60 days from the loss to pick a marketplace plan, and those windows overlap. That overlap is the moment to compare both properly, because electing COBRA and changing your mind in March is the one path that leads nowhere.
If your employer was small
Federal COBRA only applies to employers with 20 or more employees. If yours was smaller, you may never be offered COBRA at all — and people assume that means they have no continuation option.
Colorado has its own continuation privilege, running up to 18 months, for people who were continuously covered under the group plan for at least 6 months before the coverage ended.
Either way, the marketplace window is open to you on the same terms. Whether continuation or a marketplace plan is better comes down to the same comparison as above, and losing a small-employer plan is still a qualifying event.
Retiring before 65, and the runway to Medicare
Retiring before you are eligible for Medicare is the same qualifying event as any other loss of job-based coverage, and the same sixty-day window applies. Three things about it are different enough to plan for.
Your income usually falls, and the marketplace asks about this year. A premium tax credit is worked out against the income you expect for the year you are covered, not the income you earned before you stopped. People who assume their working salary disqualifies them frequently never apply, and that is the single most expensive assumption in this whole subject.
Retiree coverage is not always the better deal, and it is not always a choice you keep. If your employer offers it, compare it the same way you would compare COBRA. Be careful about dropping it, though — many retiree plans will not take you back, and that is a door that closes once.
Plan the handover to Medicare before you need it. Your marketplace plan does not become Medicare on your birthday and nobody moves you across. Enrolling in Medicare on time has its own window and its own lifetime penalty for missing it, and a marketplace plan is not the coverage that protects you from either.
We run the years between retirement and 65 as one plan rather than one enrollment — what the credit looks like at your new income, what happens to it if you draw on savings or convert a retirement account, and the month the Medicare paperwork has to start. See turning 65 for that end of it.
What to have ready
- The date your coverage ends, in writing
- Your COBRA election notice, if you have received one
- Your best estimate of household income for the rest of this year and for next year — they may be very different
- Your doctors, and any prescriptions you take regularly. If keeping a particular practice is the thing you are most worried about, that check is worth doing before you compare anything.
- Where you are in this year’s deductible
From those we can put the COBRA premium and the marketplace options side by side with the credits applied, and tell you which is cheaper for your situation. That comparison takes about twenty minutes and there is no charge for it.
Questions about losing job coverage
Is COBRA or a marketplace plan cheaper?
Usually the marketplace, and often by a lot, because COBRA charges you the full group premium plus a 2% administrative fee with no subsidy attached, while a marketplace plan can carry a federal premium tax credit and Colorado Premium Assistance on top.
The exceptions are real though. If you are mid-treatment, have already met a deductible late in the year, or have a severance agreement where the employer keeps paying, COBRA can be the better answer. Send us both numbers and we will compare them properly.
I already elected COBRA. Can I switch to a marketplace plan?
At Open Enrollment, yes, and outside it only in specific circumstances. Running COBRA to its natural end counts as losing coverage and opens a window. So does an employer completely ending its contribution toward your premium.
What does not open a window is deciding to drop COBRA because it costs too much, or losing it for non-payment. Those leave you waiting until January, which is why the comparison is worth doing before you elect rather than after.
I am retiring at 62. Do I have to pay full price until Medicare?
Almost certainly not, and this is the assumption that costs people the most. A premium tax credit is worked out against the income you expect during the year you are covered — not the salary you were earning before you retired. For a lot of early retirees that produces substantial help for the first time in their working lives.
The years between retiring and turning 65 are worth planning as one stretch rather than one application, because how you draw on savings changes the income the credit is measured against. Bring us the retirement date and a rough picture of where the money is coming from, and we will show you what each year looks like.
My coverage ends on the 31st. How do I avoid a gap?
Apply now rather than in the first week of next month. The special enrollment period opens 60 days before the loss, and applying while still covered is what lets the new plan start the day after the old one ends.
You will need documentation of the coverage ending. Ask your employer for a letter with the end date on it before your last day, while somebody is still answering.
My employer never offered COBRA. Do I have any continuation option?
Federal COBRA applies only to employers with 20 or more employees, so a smaller employer is not required to offer it. Colorado has its own continuation privilege that can run up to 18 months if you were covered under the group plan for at least six months beforehand.
Either way you have a marketplace special enrollment period, and for most households leaving a small employer the marketplace with credits applied is the cheaper of the two. Ask us to price both.