COBRA vs. Marketplace Plans in South Carolina

Yes. If you elected COBRA, you can still switch to a marketplace plan during your 60-day Special Enrollment Period triggered by your job loss. You can also switch when COBRA coverage ends, as that is another qualifying event. However, once your initial 60-day Special Enrollment Period closes and your COBRA is active, you may need to wait until COBRA ends or until the next Open Enrollment Period to enroll in a marketplace plan. The exception is if you experience another qualifying life event, such as marriage, moving to a new state, or having a child. Timing matters here, and this is one of the most common questions I get. If you are on COBRA right now and thinking about switching, call me and I can tell you exactly what your options are based on your specific timeline.

Yes. COBRA is considered creditable coverage, which means it counts toward continuous coverage requirements. This matters for several reasons. If you later enroll in an employer plan, your COBRA coverage period counts toward satisfying any pre-existing condition waiting periods. For Medicare enrollment, COBRA does not count as employer coverage, so if you turn 65 while on COBRA, you should enroll in Medicare during your Initial Enrollment Period to avoid late enrollment penalties. COBRA coverage also satisfies the minimum essential coverage requirement under the ACA, so you will not face any coverage gap issues when transitioning from COBRA to another plan.

If your employer goes out of business entirely, COBRA may not be available because there is no employer to maintain the group health plan. In that case, you qualify for a Special Enrollment Period on the marketplace because losing coverage is a qualifying life event. You have 60 days from the date you lose your coverage to enroll. If your employer had 20 or more employees, COBRA is usually still available even during bankruptcy as long as the group health plan remains active. But if the company shuts down completely and the plan terminates, your path is the marketplace. This is actually one situation where the marketplace is your only option, and the subsidy can make it significantly more affordable than what you were paying before.

Technically, you can maintain both, but it almost never makes financial sense. You cannot receive a marketplace subsidy while you are enrolled in COBRA, because COBRA is considered minimum essential coverage. So you would be paying full price for the marketplace plan plus paying the full COBRA premium. The only scenario where this might make sense is if you are in the middle of treatment with a provider who is only on the COBRA network and you want to transition to a marketplace plan for everything else. Even then, it is usually more cost-effective to pick one or the other. If you are thinking about overlapping coverage, let me review your specific situation before you commit to paying for both.

If your household income falls between 100% and 400% of the Federal Poverty Level, you qualify for premium tax credits that reduce your monthly marketplace premium. For 2024 and beyond, expanded subsidies under the Inflation Reduction Act mean that even people with incomes above 400% FPL may qualify if their benchmark plan costs more than 8.5% of their household income. For a single person, 100% FPL is roughly $15,060 and 400% FPL is about $60,240. For a family of four, the range is approximately $31,200 to $124,800. When you lose your job, your projected income for the year often drops significantly, which can increase your subsidy amount. I can run the numbers for your specific situation in about ten minutes and show you exactly what you would pay.