Individual Health Insurance Options

ACA (Obamacare), COBRA, and private individual health insurance

What to do if you need health insurance before retirement due to life changes like loss of employment, divorce or other events

ACA (Affordable Care Act) Marketplace Plans

What it is: Government-regulated plans sold on a public exchange (HealthCare.gov). The ACA aims to make health insurance more accessible and affordable, especially for those with low to moderate incomes.

Cost: Premiums can be significantly lowered by subsidies (premium tax credits) based on your income and family size. You pay the full premium if your income is too high to qualify for a subsidy.

Coverage: All plans must cover "essential health benefits" like preventative care, prescription drugs, emergency services, and maternity care, with no lifetime or annual limits. They also cannot deny you coverage for pre-existing conditions.

Enrollment: You can only enroll during the annual Open Enrollment Period, or during a Special Enrollment Period if you have a qualifying life event like losing other health coverage, getting married, or having a baby

Private Individual Health Insurance

What it is: A health insurance plan purchased directly from a private insurance company, not through the ACA Marketplace.

Cost: Generally, these plans are more expensive than ACA plans, as they are not eligible for government subsidies.

Coverage: Coverage can vary widely depending on the plan you choose. Some may offer less comprehensive benefits than an ACA plan, though they may also offer a wider choice of doctors or hospitals.

Enrollment: Enrollment for these plans is typically open year-round, unlike the limited enrollment periods for ACA plans.

COBRA
(Consolidated Omnibus Budget Reconciliation Act)

What it is: A federal law that allows you to temporarily continue the same employer-sponsored health plan you had after you leave a job or have a reduction in hours. It is an option for people who worked at a company with 20 or more employees.

Cost: You are responsible for paying the full premium, which includes the portion your employer used to pay, plus a small administrative fee (up to 2%). This can be much more expensive than a subsidized ACA plan.

Coverage: The coverage is identical to the plan you had through your employer, so you can generally keep your same doctors and prescription coverage.

Enrollment: You have a 60-day window to elect COBRA after your job-based coverage ends. Coverage can be retroactive to the day your previous plan ended. It typically lasts for 18 months, though extensions are available in some cases.

What’s right for me?

Choosing the right option depends on your personal situation, including your income, health needs, and how long you need coverage

Ultimately, your decision will depend on whether you prioritize cost savings (often available with an ACA plan) or continuity of care (guaranteed with COBRA).

Additional factors to consider include how close you are to being eligible for Medicare.

One final note- there will likely be lower amounts of subsidies offered on ACA plans in 2026 due to legislative changes. The eligibility requirements and subsidy amounts have not yet been published

ACA vs COBRA

Choosing between an ACA (Affordable Care Act) plan and COBRA coverage after leaving a job depends on your specific financial and healthcare situation. Here's a comparison to help you decide:

Choose an ACA plan if:

• You need a more affordable option. ACA plans often have lower premiums due to government subsidies (premium tax credits) based on your income and household size. Most people find ACA plans to be significantly less expensive than COBRA.

• You want more plan options. The ACA marketplace provides a variety of plans, so you can shop around and select a new plan that fits your budget and healthcare needs, even if it means changing doctors or hospitals

• You need long-term coverage. Unlike COBRA, which is a temporary solution that typically lasts 18 months, an ACA plan can be renewed annually and is not tied to your employment.

Choose COBRA if:

• You want to keep your existing plan and doctors. If you have specific doctors or are in the middle of a treatment and don't want to change plans, COBRA allows you to continue your same employer-sponsored coverage.

• You've already met your deductible for the year. If you've already paid a significant amount toward your deductible and out-of-pocket maximum, staying on your COBRA plan can save you money for the remainder of the year. If you switch to a new ACA plan, you would have to start over with a new deductible.

• Your former employer offers to subsidize the cost. Some employers may offer to continue paying a portion of your premium as part of a severance package. If this is the case, COBRA may be more affordable.

Private Individual Health Insurance versus ACA

Compared to ACA plans, private individual health insurance plans—particularly those not sold on the Marketplace—have several potential downsides. Here's a breakdown:

• Lack of Subsidies: Private plans purchased directly from an insurer are not eligible for the government subsidies (premium tax credits) that can significantly lower the cost of ACA Marketplace plans. This means you will pay the full premium, which can be much more expensive.

• Limited Coverage and Protections: While some private plans are ACA-compliant, others are not. Non-ACA compliant plans may not cover essential health benefits like prescription drugs, mental health services, or maternity care. They may also have lifetime or annual limits on coverage and can deny coverage or charge more based on pre-existing conditions.

• Less Financial Security: Since non-compliant plans may not have an out-of-pocket maximum or may not cover all your medical needs, you could be at risk of high medical bills. ACA plans have a defined out-of-pocket maximum, which protects you from unlimited medical expenses.

• The main trade-off is often between lower monthly premiums (for some non-compliant plans) and the comprehensive coverage and financial protections of an ACA plan. If you are healthy and only need a temporary, low-cost solution, a non-ACA compliant plan might seem appealing. However, if you have any health concerns or need long-term security

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