Should I choose COBRA or marketplace insurance after divorce?

The full picture

The divorce version of this question has a different answer from the job-loss version, and the difference is worth knowing before the decree.

The 36 months is the genuinely valuable part. A job loss buys 18; a divorce buys double that, which is often long enough to reach an employer plan of your own or a marketplace year with a much lower projected income.

Against that, COBRA costs what the plan actually costs. Employer coverage averaged about $793 a month for single cover and $2,294 for family in 2025, and the figure shocks people because the employer was paying most of it invisibly. A marketplace plan priced on your post-divorce income — which is usually far below the household income the subsidy was last calculated on — is frequently cheaper.

One argument for COBRA that a premium comparison misses: if you have already met most of a deductible this plan year, switching resets it to zero. Late in a plan year, after a surgery, that sunk progress can be worth more than the premium difference.

Divorce is a qualifying event with its own clock

The notification duty is the part that goes wrong. For a divorce, the burden of telling the plan falls on the employee or the qualified beneficiary rather than the employer, and the plan must be notified within the period its own rules set. The DOL's employee guide sets out the qualifying events, who must give notice for each, and the continuation periods that follow (DOL, An Employee's Guide to Health Benefits Under COBRA); the department's COBRA overview is the shorter route to the same structure (DOL).

On the marketplace side, divorce opens a special enrollment period only where it actually causes a loss of coverage. Losing coverage is the qualifying event, not the decree itself (HealthCare.gov). A former spouse who was never on the plan gains nothing here, and one who is removed from it should start the application before the removal takes effect.

Two things to settle in writing while the decree is still being negotiated: who pays the continuation premium and for how long, and what happens to the coverage if that person stops paying. A plan that does not receive the premium terminates the coverage regardless of what the decree says, and reinstatement is not generally available.

Common questions

Should I choose COBRA or marketplace insurance after divorce?

Divorce is a COBRA qualifying event in its own right, and the continuation period available to a former spouse is longer than the one that follows job loss. Against that, you pay the entire premium plus an administrative charge, with no employer contribution. A marketplace plan may cost less after any premium tax credit you qualify for, and after divorce your household income for that calculation is your own rather than the couple's. Price both against your own projected income before deciding.

What has to happen for a former spouse to keep COBRA?

Someone has to tell the plan. Unlike job loss, where the employer notifies the plan administrator, divorce is a qualifying event the employee or the qualified beneficiary has to report, and the plan is given a limited window to be told. A divorce decree can require one spouse to pay the premium, but the plan is not a party to the decree and will not enforce it. Confirm in writing that the plan has recorded the divorce, then confirm who is actually sending the payment.

Related questions

How much does divorce cost? →

Should I keep the house or sell in a divorce? →

How is retirement divided in a divorce? →

What is the financial checklist for divorce? →