COBRA vs ACA Premium Tax Credit Calculator
After job loss or hour reduction, compare COBRA continuation premium vs ACA marketplace plan with the Premium Tax Credit (PTC). The IRA-extended PTC enhancement runs through plan year 2025 (legislative status uncertain for 2026); this calculator models both scenarios. Most laid-off workers save $400-$1,200/month by switching from COBRA to ACA.
How the ACA Premium Tax Credit Works
The Premium Tax Credit (PTC) is a refundable federal tax credit that reduces what you pay for a marketplace health plan. The credit is calculated against the "second-lowest-cost silver plan" (SLCSP) in your area, capping your premium contribution at a percentage of household income that scales with the federal poverty level (FPL). The Inflation Reduction Act (IRA) of 2022 enhanced the PTC by removing the 400% FPL cliff and capping anyone's silver-plan contribution at 8.5% of income — but this enhancement expires after plan year 2025 unless Congress extends it. As of May 2026, no extension has passed; pre-IRA rules are scheduled to return for plan year 2026, meaning the 400% FPL cliff (about $60,240 single, $124,800 family of 4 in 2026) reverts to a hard cutoff. Per healthcare.gov PTC overview, the credit is available immediately as a payment to your insurance company (advance PTC) or claimed when you file Form 8962. Last updated May 2026.
COBRA vs ACA Marketplace — When Each Wins
COBRA continuation makes you keep your former employer's plan but at full price plus 2% admin fee — typically $700-$1,400/month for individual coverage, $1,800-$2,800 for family. ACA marketplace with PTC almost always wins for households with annual income under $60,240 single / $124,800 family of 4 (2026 400% FPL). COBRA wins in three specific situations: (1) You've already met the deductible/out-of-pocket max on the employer plan and need to keep using it for an active condition; (2) Your specific specialist or hospital is in-network only on the employer plan; (3) You're over the IRA 400% FPL cliff in 2026 and the marketplace silver costs more than COBRA. Outside these cases, ACA marketplace wins on cost, especially for incomes 100-250% of FPL where cost-sharing reductions also lower deductibles. Per DOL COBRA continuation rules, you have 60 days from job loss to enroll in COBRA but a parallel 60-day Special Enrollment Period for ACA marketplace.
The 60-Day Decision Window
Job loss triggers a 60-day Special Enrollment Period (SEP) on the ACA marketplace and a 60-day COBRA election window. Both clocks run simultaneously, but they're not the same decision. Critical sequence: (1) On day 1, get the official COBRA notice from your former employer's HR (legally required within 14 days of qualifying event); (2) by day 30, log in to healthcare.gov and shop ACA plans with your projected income to see PTC offers; (3) by day 45, decide. If you elect COBRA you can still switch to marketplace later when COBRA ends (loss of COBRA is itself a SEP), but you cannot switch from COBRA to marketplace mid-COBRA period without another qualifying life event. Inverse: if you initially decline COBRA and exhaust the 60-day window, you cannot retroactively elect it. Make the marketplace pricing comparison before locking in COBRA.
Income Estimation for PTC — Underestimate Costs You
The PTC is calculated against your projected 2026 modified AGI when you apply, but reconciled at tax time on Form 8962 against actual 2026 MAGI. Underestimating income means you got too much advance PTC and have to repay the excess (capped at $375-$1,575 for <400% FPL households, uncapped for >400%). Overestimating income means you got too little advance PTC and get a refund check at tax filing. A typical job-loss scenario: you estimate income based on the months you've already worked at the higher salary plus an unemployment estimate, then update healthcare.gov within 30 days when income changes (new job, freelance income, etc.). Mid-year income updates trigger a recalculation of advance PTC for the remaining months. Source: IRS PTC basics.