COBRA or a Private Plan in Texas: Which Is Actually Cheaper?

Why COBRA feels like such a jump

Employers typically pay a large majority of the premium for employee coverage. Under COBRA you pay the full cost plus an administrative fee of up to 2%, so the same plan that cost you a modest payroll deduction can cost several times that amount.

Nothing about the coverage changed. Only who pays for it did, which is why the number is so startling to people who never saw the employer's share on a payslip.

What COBRA is genuinely good for

Continuity. Your network, your deductible progress, your prescriptions and your providers all carry over unchanged. If you are mid-treatment, have met most of your deductible for the year, or have a specialist relationship you cannot interrupt, that continuity is often worth the premium.

It is also the right answer if you are weeks away from new employer coverage. Switching to a Marketplace plan and back again in that window resets your deductible twice.

When a Marketplace plan wins

Losing job-based coverage triggers a Special Enrollment Period, which means you can buy an ACA plan outside open enrollment. If your income after leaving the job is below the 400% cliff, a premium tax credit may make Marketplace coverage dramatically cheaper than COBRA.

This is the case people most often miss, because income calculated on the new, lower earnings can qualify for a subsidy that the previous salary would not have. For a Texas household whose income dropped when the job ended, the comparison is frequently not close.

The Medicare trap at 65

COBRA does not count as active employer coverage for Medicare purposes. If you are 65 or older, your Medicare Special Enrollment Period is running while you are on COBRA, and letting it expire triggers the permanent Part B late enrollment penalty.

This is one of the most expensive misunderstandings in the entire system, and it disproportionately affects people who left a job at 64 or 65 and reasonably assumed COBRA was a safe bridge. It is not.

Running the comparison in Texas

Ask your former employer's benefits administrator for the exact monthly COBRA cost including the administrative fee, then price Marketplace plans in your Texas county using your expected income for the remainder of the year rather than your former salary.

If that income falls below the 400% cliff, a premium tax credit applies and COBRA is frequently the more expensive option by a wide margin. If it does not, the comparison shifts to network continuity and how much of your deductible you have already met this year.

COBRA questions

How long does COBRA last? Usually 18 months, extendable to 36 in certain circumstances such as disability or divorce.

Can I switch from COBRA to a Marketplace plan later? Exhausting COBRA triggers a Special Enrollment Period. Voluntarily dropping it partway generally does not, so you may be locked in until the next open enrollment.

Does COBRA cover my family? Yes, and dependents have independent election rights. A spouse or child can elect COBRA even if you decline it, which occasionally makes a split arrangement the cheapest answer.