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Health insurance when you quit: COBRA or a Marketplace plan?

Published October 2, 2026 9 min read

Yes, you can get COBRA if you quit. COBRA is the federal law that lets you keep your employer's health plan after you leave, and the Department of Labor counts voluntary job loss, as long as the employer has 20 or more employees. Losing that coverage also opens a 60-day window to buy a Marketplace plan instead. The rules below are as the Department of Labor and HealthCare.gov stated them on 2 October 2026.

Can you get COBRA if you quit your job?

Yes. COBRA covers people who lose job-based coverage through “voluntary or involuntary job loss”, in the Department of Labor's words, so quitting qualifies (DOL). The exception is termination for gross misconduct. Two conditions have to hold: the employer had 20 or more employees in the prior year, and you were on its plan when you left.

Smaller employers fall outside federal COBRA. The Department of Labor notes that many states have “mini-COBRA” laws for employers with fewer than 20 employees, and sends you to your state insurance commissioner's office to check (DOL employee guide).

What happens to your health insurance after your last day?

Your plan sets the day your coverage ends, and from then you have at least 60 days to elect COBRA and a 60-day Special Enrollment Period to buy a Marketplace plan. Put real dates on every deadline in the table before you give notice.

COBRA and Marketplace deadlines after you quit
When	What happens	Source
Your last day	Your plan sets the day coverage ends. Some plans run to the end of the month, so ask HR for the exact date.	DOL FAQ
Within 30 days	Your employer must tell the plan you left.	DOL guide
14 days after that	The plan must send your COBRA election notice. Where the employer runs the plan itself, the limit is 44 days from the event.	DOL guide, FAQ, 29 CFR 2590.606-4
60 days	Your window to elect COBRA, counted from the notice or the day coverage ends, whichever is later.	DOL guide
45 days after you elect	Your first premium is due. Coverage is retroactive to the day your plan ended.	DOL FAQ
Up to 18 months	How long COBRA lasts after you quit. Some cases run to 29 or 36 months.	DOL guide
60 days before to 60 days after	Your Special Enrollment Period for a Marketplace plan. Coverage can start the first day of the month after job-based coverage ends.	HealthCare.gov, SEP page

Sources: US Department of Labor, An Employee's Guide to Health Benefits Under COBRA and the COBRA FAQ for workers; HealthCare.gov. Read 2 October 2026.

How much does COBRA cost?

COBRA costs up to 102% of the plan's full cost. The Department of Labor lets a plan charge you “the entire premium for coverage up to 102% of the cost to the plan”: your old share, your employer's share, and up to 2% on top (DOL).

That's why the bill can be a shock. In 2025 the average total premium for single coverage at a private-sector employer was $9,025 a year, and employees paid 20.1% of it. For family coverage the average was $26,281, and employees paid 27.8% (AHRQ MEPS-IC).

What the average plan costs before and after you quit (2025, a month)
Coverage	Your share at work	Full premium	COBRA at 102%
Single	$151	$752	$767
Family	$610	$2,190	$2,234

Source: AHRQ MEPS-IC 2025, Tables I.C.1-2 and I.D.1-2 (annual averages divided by 12); 102% cap from the Department of Labor. Your plan will differ, so ask HR for your plan's total premium, not your deduction.

The number on your payslip is your share. COBRA charges you the whole premium, plus up to 2%.

COBRA, a Marketplace plan or a spouse's plan?

It depends on price and doctors: COBRA keeps your plan at up to 102% of full cost, a Marketplace plan can cost less after savings, and a spouse's plan costs your share. COBRA, a Marketplace plan and a spouse's job-based plan are three routes when you quit to work for yourself. You don't have to take COBRA: HealthCare.gov says you can compare its cost with Marketplace plans before deciding (HealthCare.gov).

COBRA vs Marketplace vs a spouse's plan
	COBRA	Marketplace plan	Spouse's job-based plan
What you pay	Up to 102% of the plan's full cost	The plan's price minus any premium tax credit	Your share of that plan's premium
Doctors and drugs	Same plan, same network	A new plan: check your doctors and prescriptions	That plan's network
Income-based savings	None	Based on your estimated household income for the year	In most cases none from the Marketplace if the plan covers spouses
How long	Up to 18 months after quitting	The plan year, renewed at Open Enrollment	As long as the job and plan allow
Window to decide	At least 60 days to elect	60 days before or after losing coverage	Request special enrollment within 30 days (DOL guide); confirm with that plan's HR

Sources: DOL employee guide; HealthCare.gov COBRA page; HealthCare.gov for the self-employed. Read 2 October 2026.

COBRA can make sense when keeping the same doctors matters more than price, say in the middle of treatment. A Marketplace plan can make sense when it costs less than the full COBRA premium after savings. Price both with real quotes; the table can't do it for you.

How do you estimate income for a Marketplace plan when you're newly self-employed?

Marketplace savings for the newly self-employed are based on estimated income for the year you're covered, not last year's. HealthCare.gov asks you to “estimate your net self-employment income”, which is the Schedule C figure: sales minus the cost of the items, fees and other business expenses (HealthCare.gov).

Three rules make that estimate harder in the year you quit to resell:

Your wages count. Savings are based on estimated income “for everyone in your tax household for the full calendar year”, so the salary you earned before quitting is part of it (HealthCare.gov).
The 400% line is back. For 2026 the premium tax credit is limited to household incomes from 100% to 400% of the federal poverty line again; the expansion that removed the cap covered tax years 2021 through 2025 (IRS). For one person in the 48 contiguous states and DC, 400% of the line is $62,600 for 2026 coverage and $63,840 for 2027 coverage (4 times HealthCare.gov's poverty guideline).
Guess low and you pay it back. From tax year 2026 there is no repayment cap: you “must repay the full amount by which your advance credit payments exceed your Premium Tax Credit” (IRS).

If your sales swing month to month, estimate from your trailing twelve months of net profit, not your best month, and check it against your worst three months.

Can you switch from COBRA to a Marketplace plan later?

You can switch from COBRA to a Marketplace plan at Open Enrollment for any reason. Outside Open Enrollment, HealthCare.gov lets you switch if your COBRA is running out, your former employer stops contributing or a government subsidy ends so you pay the full cost, or you're still within 60 days of losing your job-based coverage. Another life event, such as getting married or having a baby, can also open a window (HealthCare.gov).

Dropping COBRA on your own doesn't open a window. “Voluntarily dropping COBRA doesn't count,” HealthCare.gov says, so if you end COBRA early you wait for the next Open Enrollment (HealthCare.gov). Open Enrollment for 2027 coverage starts November 1, 2026, and you enroll by December 15 for coverage that starts January 1 (HealthCare.gov).

What is the 60-day COBRA rule?

The 60-day COBRA rule is the election window. You get at least 60 days to choose COBRA, and if you elect inside it, coverage is “retroactive to the day you lost your job-based plan”. You then have 45 days to make the first payment (DOL FAQ).

Because coverage is retroactive, you don't have to decide on day one. The Department of Labor's wording is narrow: your first payment “may include premiums for more than one month”, and you “can choose to pay for just the months you want coverage”. If you waive COBRA first and revoke later, the plan's terms decide whether coverage starts back at the day you lost your plan or on the day you revoked. The 60 days is a deadline, so read your election notice and put it on a calendar.

Is there a penalty for going without health insurance?

There's no federal penalty for going without health insurance: the IRS reduced it to zero from tax year 2019 (IRS). Some states charge their own. California and New Jersey require coverage (California FTB, New Jersey Treasury), and HealthCare.gov tells people in states with a requirement to check with the state (HealthCare.gov). In a state with no requirement, going without is a risk question, not a tax question.

Where does the health premium go in your quit math?

The health premium goes into your quit number and your runway. On average your employer used to pay most of it, so it can move your answer a lot. Put the monthly premium you'll pay into the quit number calculator and your savings target. What self-employed health insurance costs covers the rest: deductibles, dental, and the tax deduction.

Sources

Every rule and figure on this page was checked against these pages, read 2 October 2026.

Can I get COBRA if I quit my job?

Yes, if your employer had 20 or more employees and you were on its plan. The Department of Labor counts voluntary job loss as a COBRA qualifying event; termination for gross misconduct is the exception. You get at least 60 days to elect it.

Is COBRA cheaper than a Marketplace plan?

It depends on your plan's full premium and what a Marketplace plan costs you after savings. COBRA can charge up to 102% of the plan's full cost and has no income-based savings. For 2026, Marketplace premium tax credits are limited to households from 100% to 400% of the federal poverty line.

How long does COBRA last if you quit?

Up to 18 months after quitting. The Department of Labor allows longer in some cases: 29 months with a disability extension, and up to 36 months after a second qualifying event.

Can I switch from COBRA to a Marketplace plan?

Yes, at Open Enrollment for any reason. Outside it, if your COBRA is running out, your former employer stops contributing, you're within 60 days of losing job-based coverage, or another life event qualifies you. Dropping COBRA on your own doesn't qualify you for a Special Enrollment Period.

What happens to my health insurance when I quit?

Your plan ends on a date the plan sets; some run to the end of the month. You then get at least 60 days to elect COBRA and a 60-day Special Enrollment Period for a Marketplace plan. Ask HR for the end date and your plan's total premium before you give notice.

Disclosure The Quit Number is published by the team behind FlowLister. FlowLister writes eBay listings from your photos, which matters here because listing is the part of a full-time week you can't skip. It's AI, so it misses things. We make it, so read this as a disclosure, not a recommendation. Nothing on this site is financial, tax or legal advice.

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