Health insurance after a layoff, before you turn 65

Your paycheck stops, and the health plan that came with it ends soon after. If you're under 65, Medicare isn't an option yet, and a COBRA notice arrives with a price most people have never seen. You have three main routes (COBRA, a marketplace plan, or a spouse's employer plan), and each has its own price at 50 to 64 and its own date after which it closes.

If that notice made your stomach drop, you're not alone. We've coached people through layoffs at FirstSourceTeam since 2006, and the COBRA bill is often the moment the layoff stops feeling abstract. It helps to know the price has a formula, the alternatives have rules, and most of the deadlines give you more time than they seem to in the first week.

Start with the price shock, because it drives most of the decisions. KFF, the health policy research group that surveys employers every year, found the average worker paid $120 a month toward single coverage in 2025, while the plan itself cost $777 a month, according to the survey's monthly premium table. COBRA can charge up to 102% of that full cost, which puts the same plan at $792.54 a month.

Family coverage shows the same jump in bigger dollars. The average worker share was $571 a month against a total premium of $2,249. At 102%, that's $2,293.98 a month, or 4.0 times the payroll deduction people are used to.

Worker share while employedTotal premiumCOBRA maximum (102% of total)

Note: COBRA column is a calculation: $777 x 1.02 = $792.54 and $2,249 x 1.02 = $2,293.98. Your plan's actual premium will differ from the national average. COBRA values shown rounded to the dollar from $792.54 and $2,293.98.

Exhibit 1. Source: KFF Employer Health Benefits Survey 2025, Section 1 tables, Figure 1.3 (average monthly premiums, all plans, all firm sizes: $777 single, $2,249 family) and Section 6 tables, Figure 6.3 (average monthly worker contributions, 2025: $120 single, $571 family); COBRA maximum computed as 102% of the total premium under the US Department of Labor rule

Those are national averages, and your own plan's number is on your election notice. The point of the exhibit is the size of the gap. Your employer was paying most of the bill, and after a layoff that share moves to you unless a severance agreement says otherwise.

Employer size changes how big the jump feels. KFF found workers at firms with 200 or more employees paid 23% of the family premium in 2025, against 36% at firms with 10 to 199 workers. People leaving large employers, who had the most subsidized payroll deduction, see the steepest relative increase.

COBRA continuation coverage

COBRA generally covers group health plans at private employers with 20 or more employees and most state and local government plans, per the US Department of Labor's guide to COBRA (the DOL). Losing your job for any reason other than gross misconduct is a qualifying event. Coverage usually lasts up to 18 months after a job loss. A disability extension can stretch it to 29 months, and a second qualifying event, like a divorce, can extend it to 36.

The paperwork runs on a fixed clock. Your employer has 30 days to tell the plan you've left. The plan then has 14 days to send you an election notice. When the employer is also the plan administrator, federal regulation 29 CFR 2590.606-4 instead gives it 44 days in total, counted from the qualifying event or the loss of coverage.

From there the deadlines are yours:

• You have at least 60 days to decide whether to elect COBRA.
• The plan must give you at least 45 days after you elect to make the first payment.
• Each later monthly payment has a 30-day grace period.

The first thing we ask clients to find is the exact date their work coverage ends. Every window in this guide counts from it, and it isn't always the same as the last day of work.

Depending on plan rules, COBRA can start on the date you elect it or reach back to the date your coverage ended, the DOL guide says. That retroactive feature is why the election window and the first-payment window matter so much: a bill for several months can arrive at once.

Severance agreements sometimes include a few months of employer-paid COBRA. HealthCare.gov lists the moment your former employer stops contributing, and you start paying the full cost, as one of the events that lets you move to a marketplace plan outside open enrollment.

The full premium has also been climbing. KFF's data show the average family premium at $17,680 in 2015 and $26,993 in 2025. Over the last five years of that span, family premiums rose 26%, against 28.6% for workers' wages and 23.5% for inflation.

Total family premiumWorker contribution

Note: Under COBRA you pay the total premium plus up to 2%, so the top line is the one that applies after a layoff.

Exhibit 2. Source: KFF Employer Health Benefits Survey 2025, Figure 6.5, Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2025

Marketplace health plans for ages 50 to 64

The ACA marketplace is the main alternative for anyone without a spouse's plan. Its prices are quoted as a benchmark: the second-lowest-cost silver plan in a county. KFF puts the 2026 national average benchmark for a 40-year-old at $625 a month, up from $497 in 2025, a 26% rise. State averages run from $401 in New Hampshire to $1,299 in Vermont. Minnesota's was $448.

Shopping for your own plan after decades of employer coverage is disorienting, and the age rules below can feel like a charge for experience. When clients compare, we ask them to put the COBRA notice next to a marketplace quote for their own age and ZIP code before weighing anything else.

Note: Second-lowest-cost silver plan for a 40-year-old, weighted by county plan selections. Full price before any premium tax credit.

Exhibit 3. Source: KFF State Health Facts, Marketplace Average Monthly Benchmark Premiums, United States row, 2014-2026

Age moves the price more than anything else on the application. Rules from CMS, the federal agency that oversees the marketplace, let insurers vary adult premiums by age within a 3:1 ratio, using a federal age curve unless a state sets its own. On the default curve, a 40-year-old is rated at 1.278 times the age-21 premium, a 55-year-old at 2.230, a 60-year-old at 2.714, and anyone 64 or older at 3.000.

So in a state on the default curve, a 60-year-old's full-price premium for the same plan is 2.714 divided by 1.278, or 2.12 times the 40-year-old figure KFF reports. The CMS table, prepared for the 2018 plan year, has separate columns for DC, Massachusetts and Utah with different adult factors, and for New Jersey's small-group market. Alabama, Minnesota, Mississippi and Oregon also have columns, but their factors for ages 21 and older match the default.

Note: Applies in states without their own curve; The CMS market rating reforms page links no later table. DC, Massachusetts and Utah have different adult factors; the New Jersey column is for the small-group market; Alabama, Minnesota, Mississippi and Oregon differ only for ages 0 to 20.

Exhibit 4. Source: Centers for Medicare & Medicaid Services, State Specific Age Curve Variations (May 31, 2017), Default Premium Ratio column

Those are prices before any tax credit. For a lot of laid-off professionals, the credit decides the comparison with COBRA.

Marketplace premium tax credits

HealthCare.gov lists the premium tax credit range as household income between 100% and 400% of the federal poverty level, in every state. Savings for a coverage year are set using the prior year's poverty guidelines. For the rest of 2026, that means the 2025 figures: $15,650 for one person and $21,150 for two, so the 400% line is $62,600 and $84,600. For 2027 plans, which go on sale November 1, HealthCare.gov points shoppers to the 2026 figures: $15,960 and $21,640, which puts the 400% line at $63,840 for one person and $86,560 for a couple.

This is the part people tell us confuses them most, and that's fair: the income that counts is a guess about a year that hasn't finished yet. A common slip we see is copying last year's tax return into the application.

Household size	2025 guideline (2026 coverage)	400% (2026 coverage)	2026 guideline (2027 coverage)	400% (2027 coverage)
1	$15,650	$62,600	$15,960	$63,840
2	$21,150	$84,600	$21,640	$86,560
3	$26,650	$106,600	$27,320	$109,280
4	$32,150	$128,600	$33,000	$132,000

Note: 400% columns are calculations (guideline x 4). HealthCare.gov uses the prior year's guideline for the next coverage year and points 2027 shoppers to the 2026 amounts. Amounts are higher in Alaska and Hawaii.

Exhibit 5. Source: HealthCare.gov, Federal poverty level (FPL) glossary entry (2025 and 2026 income columns; premium tax credit range of 100% to 400%)

The rules changed this year. KFF's marketplace FAQ, updated January 14, 2026, says the premium tax credit enhancements that began in 2021 expired at the end of 2025 and have not been renewed by Congress.

The income that counts is your estimate for the year you want coverage, not last year's, per HealthCare.gov. That has three consequences after a layoff:

• The estimate covers the whole year, so pay you earned before the layoff counts toward it.
• Severance is taxable wages, per IRS Publication 525, so a lump sum paid this year lands in this year's income.
• HealthCare.gov tells applicants to include all unemployment compensation and most IRA and 401(k) withdrawals.

A layoff in October with a full year of pay and a severance check can put the rest of this year above the line, while next year's estimate, built on unemployment benefits and partial-year earnings, may fall inside it. The marketplace application asks for that estimate, and the credit is reconciled on your tax return.

Health insurance enrollment deadlines

Leaving a job opens a special enrollment period for the marketplace. HealthCare.gov says you can qualify if you expect to lose coverage in the next 60 days or lost it in the past 60 days, and the DOL guide puts it plainly: you must select a marketplace plan within 60 days of losing your job-based coverage. You can apply for marketplace coverage even if you're eligible for COBRA.

Nobody does their best thinking the week after a layoff. That's why we suggest writing all three dates on one page first and making the decision second.

The order of decisions matters because of one rule. If you elect COBRA and then end it early by choice, you generally can't enroll in the marketplace until the next open enrollment, which runs November 1 to January 15. Running out of COBRA at the end of 18 months does open a new 60-day window, and so does your former employer ending its contribution.

A spouse's employer plan is the third route, and it has the shortest clock. The DOL guide says you usually have only 30 days from losing coverage to request special enrollment in another employer plan.

Medicare changes the picture for anyone near 65. Medicare.gov describes a seven-month initial enrollment period starting three months before the month you turn 65. Separately, you have up to eight months after you stop working, or lose your health insurance if that happens first, to sign up for Part B without a late penalty, whether or not you take COBRA. Medicare.gov also says your COBRA will probably end once you sign up for Medicare.

COBRA election notice

Plan

Acme Manufacturing Group Health Plan (PPO)

Qualifying event

Termination of employment

Qualifying event date

September 30, 2026

Date coverage ended

September 30, 2026

Notice date

October 14, 2026

1Election deadline

December 13, 2026 (60 days after the later of loss of coverage or this notice)

2First premium due

Within 45 days after you elect

3Monthly premium, employee only

$792.54

Monthly premium, employee + family

$2,293.98

4Maximum coverage period

18 months (through March 31, 2028)

Grace period for later payments

30 days

Marketplace note

You may be able to enroll in a Marketplace plan within 60 days of losing coverage, even though you are eligible for COBRA.

1. 1You get at least 60 days to elect. Coverage can reach back to the day your work plan ended, depending on plan rules.
2. 2The first payment is due no sooner than 45 days after you elect, and it can cover every month back to the date coverage ended.
3. 3Up to 102% of the plan's full cost. While employed, the average worker paid $120 a month for this coverage in 2025.
4. 4Usually 18 months after a job loss. Running out of COBRA opens a new 60-day window to buy a marketplace plan.

The notice in the mock uses national averages and example dates. Yours will show your plan's actual premium and the date the 60-day clock started, and that date sets every deadline above.

Working with FirstSourceTeam

FirstSourceTeam is a family-owned firm in Minneapolis, and we've coached job seekers since 2006. When someone comes to us right after a layoff, health coverage is usually one of the first questions on the table, next to the search itself. We help you think through the benefits side: reading the COBRA notice, lining up the dates, and seeing how severance and the timing of income affect help with marketplace premiums. We don't recommend a plan or an insurance product. The rest of the work is getting you back to work, with one-to-one coaching, a rebuilt resume and LinkedIn profile, interview preparation and introductions to recruiters. The easiest first step is our free one-hour webinar, every Wednesday at 11 AM Central with John Schrup and Misty Schnuelle.

Sources

1. KFF, 2025 Employer Health Benefits Survey, accessed Oct 12, 2026.
2. KFF, 2025 Employer Health Benefits Survey, Section 1 tables (Excel), Figure 1.3, accessed Oct 12, 2026.
3. KFF, 2025 Employer Health Benefits Survey, Section 6 tables (Excel), Figures 6.2, 6.3 and 6.5, accessed Oct 12, 2026.
4. US Department of Labor, Employee Benefits Security Administration, A Worker's Guide to Health Benefits Under COBRA, accessed Oct 12, 2026.
5. Legal Information Institute, Cornell Law School (Code of Federal Regulations), 29 CFR 2590.606-4, Notice requirements for plan administrators, accessed Oct 12, 2026.
6. HealthCare.gov, COBRA coverage and the Marketplace, accessed Oct 12, 2026.
7. KFF State Health Facts, Marketplace Average Monthly Benchmark Premiums, accessed Oct 12, 2026.
8. Centers for Medicare & Medicaid Services, Market Rating Reforms, accessed Oct 12, 2026.
9. Centers for Medicare & Medicaid Services, State Specific Age Curve Variations (May 31, 2017), accessed Oct 12, 2026.
10. HealthCare.gov, Federal poverty level (FPL), accessed Oct 12, 2026.
11. KFF, Changes to Marketplace premium tax credits (FAQ, updated January 14, 2026), accessed Oct 12, 2026.
12. HealthCare.gov, Qualifying for lower costs, accessed Oct 12, 2026.
13. HealthCare.gov, What income to include in your estimate, accessed Oct 12, 2026.
14. Internal Revenue Service, Publication 525 (2025), Taxable and Nontaxable Income, accessed Oct 12, 2026.
15. HealthCare.gov, Special Enrollment Period, accessed Oct 12, 2026.
16. Medicare.gov, When does Medicare coverage start?, accessed Oct 12, 2026.
17. Medicare.gov, COBRA coverage, accessed Oct 12, 2026.