Is COBRA or the ACA Marketplace cheaper for a freelancer?

The ACA Marketplace is usually cheaper for freelancers because Premium Tax Credits can cut the premium dramatically based on income. COBRA requires you to pay the full employer-plus-employee premium plus a 2% admin fee, so it often costs two to three times more than a subsidized ACA plan.

How long does COBRA last?

Standard COBRA continuation lasts 18 months when triggered by job loss or reduced hours. Certain qualifying events (disability, death of the covered employee, divorce) can extend it to 29 or 36 months. You must elect COBRA within 60 days of losing coverage.

Can I deduct COBRA premiums as a self-employed worker?

Yes. COBRA premiums count as medical insurance for the self-employed health insurance deduction on Schedule 1, up to your net SE profit. The same 100% above-the-line deduction that applies to ACA premiums applies to COBRA.

What income qualifies for ACA Premium Tax Credits in 2026?

Premium Tax Credits are available from 100% of the federal poverty level upward, with the credit phasing down as income rises. A freelancer with modified household income around $60,000 can often get a Silver plan for $250-$400 per month after the credit, versus $650+ unsubsidized.

COBRA vs ACA Marketplace 2026: Which Is Cheaper for Freelancers? | Cashbizly

The Choice Every New Freelancer Faces

When you leave a W-2 job for self-employment, health insurance is the first real problem. You have two main paths: COBRA continuation of your former employer plan, or a new policy on the ACA Marketplace. The right call depends on your income, your doctors, and how fast you need coverage. For most freelancers, the ACA Marketplace wins on price — but COBRA wins in specific situations.

How COBRA Works

COBRA lets you keep your former employer health plan for up to 18 months after leaving the job. The catch is cost: you pay the full premium — both the employee share and the employer share — plus a 2% administrative fee. Employers typically cover 70-80% of the premium while you are employed, so going on COBRA can double or triple your monthly cost overnight.

If your employer plan cost you $250 a month as an employee, the full premium might be $1,000, and COBRA adds 2% — bringing your COBRA cost to $1,020 a month. That sticker shock is why most freelancers jump to the Marketplace.

How the ACA Marketplace Works

The ACA Marketplace sells individual health plans with income-based Premium Tax Credits. The credit is computed against a benchmark Silver plan and can be applied to any metal tier. A freelancer with $60,000 of household income might see a $650 unsubsidized Silver plan drop to $250-$400 per month after the credit. Lower incomes get larger credits; higher incomes get smaller ones, and the credit disappears entirely once premiums fall below a set percentage of income.

Option	Typical Monthly Cost (Freelancer, $60k income)	Coverage Length
COBRA	$650 – $1,200 (full premium + 2%)	Up to 18 months
ACA Marketplace (subsidized)	$250 – $400 after credit	Annual, renewable
ACA Marketplace (unsubsidized)	$500 – $800	Annual, renewable

Pro Tip: Run both numbers before you elect. COBRA gives you 60 days to decide after losing employer coverage, and coverage is retroactive to the loss date if you elect it. If you are mid-treatment for a serious condition, take COBRA immediately to keep your doctors and deductibles. If you are healthy, compare Marketplace pricing on Healthcare.gov first — the savings often fund your first quarter of self-employment taxes.

When COBRA Wins

COBRA is the right call in three situations. First, you are mid-treatment and cannot afford a network change — keeping your current doctors and deductibles matters more than price. Second, you left your job late in the year and have already met your deductible; starting a new ACA plan resets it. Third, your household income is too high for meaningful Premium Tax Credits, making the price gap small.

When the ACA Marketplace Wins

The Marketplace wins for most freelancers because of the subsidies. If your modified AGI lands between roughly 100% and 400% of the federal poverty level, the credit can cut premiums by 50% or more. Even above that range, Marketplace plans often have narrower provider networks and higher deductibles but lower base premiums than employer plans.

The Marketplace also offers variety: Bronze plans for catastrophic coverage, Silver for balanced cost-sharing, Gold for lower deductibles. COBRA locks you into whatever your employer offered.

Compliance Warning: If you take COBRA, you generally cannot switch to an ACA Marketplace plan mid-year unless you have a separate qualifying life event. Open enrollment for the ACA runs November 1 to January 15 in most states. Plan the transition timing carefully — picking COBRA in July can trap you out of the Marketplace until the following January unless you exhaust the 18 months or have another qualifying event.

The Tax Angle

Both COBRA and ACA premiums qualify for the self-employed health insurance deduction — 100% above-the-line on Schedule 1, up to net SE profit. So whichever you choose, the after-tax cost is lower than the sticker price. A freelancer paying $7,800 a year in ACA premiums and in the 24% bracket effectively pays about $5,900 after the deduction. Model the full picture with the Self-Employment Tax Calculator and confirm the deduction with the Tax Deduction Finder.

The Bottom Line

Choose the ACA Marketplace if you want the lowest monthly cost and your income qualifies for Premium Tax Credits. Choose COBRA if you need to keep specific doctors, are mid-treatment, or already met your deductible for the year. Either way, deduct 100% of premiums above-the-line as a self-employed worker. Decide within the 60-day COBRA election window, and watch the ACA open-enrollment calendar if you need to switch.

COBRA vs ACA Marketplace 2026: Which Is Cheaper for Freelancers?