How COBRA Affects Your Obamacare Health Insurance Subsidy

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Are you eligible for COBRA continuation health insurance because you’re losing your job, getting divorced, newly widowed, or aging off of a parent’s job-based health insurance? Those same qualifying events also make you eligible for a special enrollment period on your state’s Obamacare health insurance exchange.

However, COBRA can impact your ability to get Marketplace health insurance and health insurance subsidies.

Timing is critical. Here’s what you need to know to avoid screwing up your ability to get help paying for health insurance.

Can I Sign Up for Obamacare If I’m Offered COBRA Health Insurance?

Yes, if you time it correctly. You have a limited period of time after the qualifying event (losing your job or getting divorced, for example) to sign up for COBRA. That same event also likely triggers a time-limited special enrollment period on your Affordable Care Act health insurance exchange.

If, during this time period, you decide against COBRA coverage, you can sign up for an Obamacare plan on the health insurance exchange. However, once you accept the COBRA coverage, you can’t later cancel your COBRA coverage and sign up for an Obamacare plan whenever you feel like it. Once you’ve started COBRA, if you decide you want to switch to a Marketplace plan, you’ll have to wait until the next Marketplace open enrollment.

Learn more in “How COBRA Eligibility Affects Your Ability to Get Obamacare."

Can I Get an Obamacare Subsidy to Help Pay for COBRA?

No. Both the premium tax credit health insurance subsidy and the cost-sharing subsidy available on the Marketplace can only be used with health plans purchased through the Marketplace.

If you buy health insurance off of the Marketplace, whether it’s COBRA continuation coverage or other private health insurance, you cannot use an Obamacare subsidy to defray the cost.

Does an Offer of COBRA Insurance Make Me Ineligible for an Obamacare Subsidy?

No. Merely being offered COBRA doesn’t affect your ability to qualify for an Obamacare subsidy. But, to take advantage of the subsidy, you’ll have to forgo your COBRA coverage and enroll in an Obamacare plan through the health insurance exchange during your 60-day special enrollment period. You’ll also have to meet income and other requirements to qualify for a subsidy.

If I Lose or Cancel My COBRA Coverage, Can I Still Get an Obamacare Subsidy?

Maybe. Losing or canceling your COBRA doesn’t actually disqualify you from getting an Obamacare subsidy, but it may impact your eligibility for an Obamacare plan. Since you can only use the subsidy with an Obamacare plan, qualifying for the subsidy won’t help you at all if you’re not eligible to sign up for an Obamacare health plan.

If you lose your COBRA health insurance because your COBRA eligibility period of 18-36 months expired, you’re eligible for a 60-day special enrollment period on the Marketplace.

You can enroll in a Marketplace plan and apply for a subsidy during this special enrollment period.

If you voluntarily canceled your COBRA coverage or you lost it because you didn’t pay your premiums, you won’t be eligible for a Marketplace special enrollment. You’ll have to wait until the next open enrollment period to sign up for an Obamacare plan. During that open enrollment period, you may also apply for both the premium tax credit health insurance subsidy for those with incomes less than 400% of federal poverty level and the cost-sharing subsidy for those with income less than 250% of FPL.

What Do I Do?

When you first become eligible for COBRA, look carefully at your financial situation. Find out how much your COBRA premiums will be. Ask yourself if you’ll be able to afford COBRA premiums given the change in your financial situation caused by your qualifying event.

Next, find out whether or not you’ll be eligible for help paying for health insurance you buy through the Marketplace. If you’re eligible for a subsidy, how much will an Obamacare plan comparable to your current coverage cost after the subsidy?

Compare your cost for subsidized Obamacare coverage with your cost for COBRA continuation coverage. Factor in your comfort level with your current health plan versus changing health plans, and base your decision on those factors.


Health Reform FAQs Tag: COBRA, Kaiser Family Foundation. Accessed July 18, 2015.
FAQs About COBRA Continuation Health Coverage, Employee Benefits Security Administration, United States Department of Labor. Accessed July 10, 2015.
Special Enrollment Period, Glossary, Accessed July 9, 2015.
COBRA Coverage and the Marketplace,  Accessed July 9, 2015.

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