How do I handle health insurance during a career break?

Compare a Marketplace plan against COBRA before you elect either one.

Electing COBRA closes your Marketplace window until the next open enrollment, and for a year with little or no salary the Marketplace is often the cheaper side of that door.

When your job-based coverage ends, two doors open at once and one of them locks the other. You can continue your employer plan through COBRA, or you can buy a plan on the Marketplace. Leaving a job for any reason opens a Special Enrollment Period, so this applies to a resignation and a sabbatical exactly as it applies to a layoff.

You get 60 days before and 60 days after your coverage ends to choose a Marketplace plan. Here is the part nobody mentions: if you elect COBRA first, you cannot move to a Marketplace plan until the next open enrollment. KFF puts it plainly: once you enrol in COBRA, you are there until open enrollment comes round.

The trapCOBRA is the form HR hands you on your way out, so it is the one most people sign. Price a Marketplace plan first, even if you end up choosing COBRA anyway. The comparison costs you an evening. Getting it wrong costs you the difference, every month, until January.

COBRA continues the plan you already have, with the same network and the same deductible progress. For a job ending or hours dropping, the maximum period is 18 months.

The price is the surprise. Your plan may charge up to 102% of the full premium: the share you paid by payroll deduction, plus the share your employer was quietly paying on top, plus a 2% administration charge. Most people have never seen the employer half, which is why the first invoice lands so hard.

COBRA is worth its price in three situations. You are mid-treatment and changing networks would interrupt it. You have already met a large deductible this year. Or the break is short enough that switching twice is more disruption than it is worth.

Marketplace premium tax credits are calculated on your income for the year you are covered, not on what you were earning when you resigned. That is what makes a career break different from ordinary shopping: the thing that makes the coverage expensive is the salary you are about to stop collecting.

The rules changed underneath this in 2026. The enhanced credits introduced in 2021 and extended through 2025 expired at the end of last year, and the original structure came back with them. Credits now run from 100% to 400% of the federal poverty level, and stop completely above 400%. There is no taper at the top. A dollar over the line and the credit is zero.

For 2026 coverage the poverty level is $15,650 for a single adult and $32,150 for a family of four, so the 400% line sits at roughly $62,600 and $128,600. Below it, households pay between 2.1% and 9.96% of income toward a benchmark silver plan and the credit covers the rest.

The scale of the change is visible in who stayed. Marketplace enrolment fell from 22.1 million in 2025 to 19.2 million by February 2026, average premium payments rose 58%, and deductibles rose 37% as people moved to bronze plans to absorb it.

Because the credit is assessed on the whole coverage year, the month a break starts decides which side of that 400% line you land on. The same six months off is a different insurance problem depending on when you take it.

Leave in January and most of that calendar year has little or no salary in it, so your annual income may fall well inside the subsidy range. Leave in July with half a year of a high salary already banked and the same six months off may leave you above 400% for the year, with no credit at all, while being equally unemployed.

What this means for the plan The break-start slider in the sabbatical calculator moves your Optional Date by a few months. It can move your health insurance cost by more than that in absolute terms. Worth checking both before you pick a start date.

The figures above are illustrative and rounded. Run yours through the KFF calculator linked below, which takes your age, household size and expected income for the year.

Whatever you land on becomes a monthly number, and that number is an input to the break itself. The sabbatical lever takes health cost per month alongside living costs and the sabbatical fund, and rolls them into the cash the break requires. If the cash falls short, the shortfall comes out of investments at the start of the break, which is what turns a few months of delay into considerably more.

Everything above comes from the following. All are primary or independent, none are insurance brokers, and the dollar figures are 2026 values that will move next January.

• US Department of Labor — FAQs on COBRA Continuation Health Coverage for WorkersThe 18-month maximum and the 102% ceiling on what a plan may charge.
• HealthCare.gov — See your options if you lose job-based health insuranceThe 60 days either side of losing coverage, and that it applies however the job ended.
• KFF — I’m leaving my job and will be eligible for COBRA. Can I shop on the Marketplace instead?That electing COBRA blocks a Marketplace switch until open enrollment.
• KFF — What we know so far about 2026 ACA Marketplace enrollment, premiums and deductiblesEnrolment falling from 22.1 to 19.2 million, premium payments up 58%, deductibles up 37%.
• KFF — Health Insurance Marketplace CalculatorThe 2026 poverty figures, the 2.1% to 9.96% contribution range, and the place to run your own numbers.

Can I get a Marketplace plan if I quit rather than get laid off?

Yes. Losing job-based coverage opens the enrollment window whether you were laid off, fired or walked out on your own terms. The 60 days run either side of the day your coverage ends, not the day you resigned.

Can I start on COBRA and switch to the Marketplace later?

Not until the next open enrollment. This is the single most expensive thing to get wrong here, and it is the default path, because COBRA paperwork arrives on its own and a Marketplace plan is something you have to go and find.

Does the break make my coverage cheaper?

It can, because the credit is based on the income of the year you are covered. But since the enhanced credits expired at the end of 2025 there is no partial credit above 400% of the poverty level, so a break that leaves your annual income above that line gets nothing from it.

What about an HSA?

You can keep spending an existing HSA balance on qualifying costs during a break, including some premiums while receiving unemployment compensation. Whether you can keep contributing depends on the plan you move to being HSA-eligible, which many Marketplace plans are not. Check the specific plan rather than assuming.