2026 · scenario
COBRA or the marketplace after a layoff?
The 2026 answer hinges on one number the old advice ignores: whether your income lands under the 400% poverty-level subsidy cliff, which is back this year.
Most COBRA-vs-marketplace advice on the web is stale, because the rules changed for 2026. The enhanced premium tax credits that had removed the subsidy cliff expired on 31 December 2025. So for 2026 the hard 400% federal poverty level cliff is back: under it, marketplace subsidies can make coverage far cheaper than COBRA; over it by a single dollar, the subsidy is $0 and the comparison flips. A layoff year, often a lower-income year, is exactly when this cuts in your favor.
Same person, two income levels
A single filer, COBRA at $750/month, a $480 benchmark marketplace plan, over 12 months:
| 2026 income | COBRA (12 mo) | Marketplace net (12 mo) | Cheaper |
|---|---|---|---|
| $42,000 (under the cliff) | $9,000 | $3,576 | marketplace by $5,424 |
| $70,000 (over the cliff) | $9,000 | $5,760 | marketplace by $3,240 |
At $42,000 a subsidy makes the marketplace much cheaper; at $70,000, over the cliff, the subsidy vanishes and the gap narrows. The exact same plans, a different answer, decided entirely by whether income clears 400% of poverty.
The wait-and-see move
You have 60 days to elect COBRA, and it's retroactive to your loss date. So a healthy person can decline COBRA at first, shop the marketplace, and still fall back on COBRA (paying the back premiums) if a medical need arises inside the window. One caveat: once enrolled in COBRA, a single late payment terminates it.
Questions
What changed for 2026?
The enhanced premium tax credits (which had removed the 400% FPL cliff since 2021) expired at the end of 2025. For 2026, pre-2021 rules apply: subsidies phase out entirely above 400% of poverty. Verified 2026-07-24, Congress had not enacted an extension.
Does a severance lump sum affect this?
Yes, a lump sum can spike your income over the cliff for that year. Spreading severance across two tax years, or timing marketplace enrollment, can keep you under 400% FPL. See lump sum vs installments.
Work it out
- COBRA vs marketplace calculator your numbers
- ACA subsidy calculator the credit in detail
- Layoff runway
Estimate for the 2026 plan year. ACA rules can change, last verified 2026-07-24. Not tax, legal, or insurance advice.