Health insurance after losing a job in North Carolina: COBRA or the Marketplace?

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Short answer

You can often keep the same plan through COBRA or North Carolina's state continuation, at up to the full cost plus 2 percent. Losing job-based coverage may also qualify you to pick a Marketplace plan within 60 days, which may cost less if you qualify for a premium tax credit.

When a job ends, the health plan that came with it usually ends too. You then have a few routes, and the main two run on 60-day clocks.

Your options when job-based coverage ends

COBRA: keep the plan you had at work for a limited time, usually up to 18 months after a job ends. It generally applies to employers with 20 or more employees.
North Carolina state continuation: a similar right under state law for fully insured group plans bought in North Carolina, also for up to 18 months.
A Marketplace plan through HealthCare.gov. Losing job-based coverage may qualify you for a Special Enrollment Period to enroll.
A spouse's or parent's job-based plan, if one is offered to you. You usually need to ask within 30 days of losing your coverage.
Medicaid, which you can apply for at any time of year if you think you may be eligible.

COBRA: the same plan, at full price

COBRA keeps the plan you already have, with the same network and drug list. The difference is who pays. Your employer usually paid part of the premium while you worked; under COBRA the plan can charge you the full cost plus 2 percent for administration, up to 102 percent of the plan's cost. That is often more than you are used to paying.

You have at least 60 days to decide, counted from the date of the election notice or the date your coverage would otherwise end, whichever is later. Once you elect COBRA, the plan must give you at least 45 days to make the first payment.

North Carolina state continuation

Federal COBRA covers employers with 20 or more employees. North Carolina also has its own continuation law for fully insured group plans bought in the state. It lasts up to 18 months, with no extensions, and you must have been covered under the employer's plan for the three months before your coverage ended.

The premium can be no more than the full group rate plus a 2 percent administration fee, and there is no grace period for late payments. It is not available if you could be covered by another group plan within 31 days. Your former employer or the insurer can tell you whether COBRA or state continuation applies to your plan.

A Marketplace plan and the 60-day window

Losing job-based coverage may qualify you for a Special Enrollment Period on HealthCare.gov. The window covers the 60 days before your coverage ends and the 60 days after, so you can apply as soon as you know the end date. The Marketplace may ask for documents that show you lost coverage, so keep the letter from your employer or plan.

If you qualify for a premium tax credit, it is based on your household's estimated income for the year you need coverage, not on whether you are working.

How COBRA and the tax credit fit together

Being offered COBRA does not by itself stop you from getting a premium tax credit. If you turn COBRA down, you may still be eligible for the credit on a Marketplace plan. If you enroll in COBRA, you cannot get the credit for the months you are on it.

Leaving COBRA early needs care. You can switch to a Marketplace plan while you are still within 60 days of losing your job-based coverage, during open enrollment from November 1 to January 15, or when your COBRA runs out. Dropping it by choice, or stopping payments, does not open a Special Enrollment Period, so outside those times you would usually wait for the next open enrollment.

What to do first

Find the date your job-based coverage ends. Most of the deadlines count from it.
Look up Marketplace plans and prices on HealthCare.gov and set them beside your COBRA offer.
Estimate your household income for the year, because any premium tax credit is based on it.
List your doctors and prescriptions, and check them against any plan before you let your old coverage go.

If you would rather go through it with someone, Muawia Abdalla, a licensed North Carolina insurance producer, can help you compare your COBRA offer with the Marketplace plans available to you, by phone or in the Durham office. ZAVIA does not charge customers an additional fee for Marketplace enrollment assistance.

Frequently asked questions

How long do I have to pick a Marketplace plan after losing my job?

Losing job-based coverage may qualify you for a Special Enrollment Period that covers the 60 days before your coverage ends and the 60 days after. The Marketplace may ask for documents that show you lost coverage. Outside that window you would usually wait for open enrollment, which runs November 1 to January 15.

Can I get a premium tax credit if I was offered COBRA?

You may. Being offered COBRA does not by itself make you ineligible, and if you turn it down you may still be eligible for the credit on a Marketplace plan. If you enroll in COBRA, you cannot get the credit for the months you are on it.

How much does COBRA cost?

The plan can charge you the full cost of the coverage, including the part your employer used to pay, plus 2 percent for administration, up to 102 percent in total. North Carolina's state continuation has a similar cap: the full group rate plus a 2 percent fee.

Can I switch from COBRA to a Marketplace plan later?

Yes: during open enrollment from November 1 to January 15, while you are still within 60 days of losing your job-based coverage, or when your COBRA runs out. Dropping COBRA by choice or stopping payments does not open a Special Enrollment Period, so outside those times you would usually wait for the next open enrollment.