When COBRA runs out: health insurance in Arizona

Mark Ellison is 54 and lives alone in a townhouse in Ahwatukee, on the south side of South Mountain in Phoenix. He spent 16 years as an IT systems specialist at a large company, keeping its servers and office networks running. In February 2025, he was laid off in a corporate restructuring.

His job-based plan ended with the job, and his COBRA coverage began on March 1, 2025. COBRA usually lasts a maximum of 18 months after a job ends, and his runs out on August 31, 2026. At open enrollment for 2026 coverage, he chose to stay on COBRA so he could keep seeing the same doctors.

Does running out of COBRA let you buy a marketplace plan outside open enrollment? Yes. Reaching the end of COBRA counts as losing coverage and opens a 60-day Special Enrollment Period on HealthCare.gov. Dropping COBRA early on purpose, or stopping payments, generally doesn’t. A plan picked before COBRA ends starts the first of the following month.

Mark is fictional. The rules in his story come from HealthCare.gov, CMS, the IRS and the U.S. Department of Labor.

Running out of COBRA, in brief

• Running out counts. Reaching the end of COBRA, its maximum length, is a loss of coverage.
• Leaving early usually doesn’t. HealthCare.gov: “Voluntarily dropping COBRA doesn’t count. Choosing to stop paying COBRA premiums on your own doesn’t qualify.” The exception is someone still inside the original 60 days after losing the job-based plan, who can still pick a marketplace plan.
• How long COBRA lasts. The Department of Labor says COBRA usually lasts a maximum of 18 months after a job ends or hours are cut.
• The window. A plan can be picked in the 60 days before COBRA ends or in the 60 days after.
• When coverage starts. A plan picked on or before the day COBRA ends starts the first of the month after it ends. A plan picked after that starts the first of the month after it’s picked.
• Proof. HealthCare.gov may ask for documents proving the event: “After you pick a plan, you have 30 days to send the documents.”
• Where to enroll. In Arizona, through HealthCare.gov.

Mark’s story

Choosing COBRA, twice

When the layoff came, COBRA was the easy choice. It kept the plan he had, the network he knew and the doctors he saw. He paid the premiums himself, every month.

He could also have picked a marketplace plan in the 60 days after his job-based plan ended. He let those 60 days pass without looking.

At open enrollment for 2026 coverage, he did look. He chose to stay on COBRA for its last 8 months, to keep his doctors. It was a choice with a price: COBRA itself comes with no premium tax credit.

Thinking about leaving early

In the spring of 2026, after a slow month of contract work, Mark wondered whether he could stop paying COBRA and move to a marketplace plan right away. Not without a gap. His original 60 days were long past. Dropping COBRA on purpose, or letting the payments lapse, would have opened no window. With no other qualifying event, he’d have had no way onto a marketplace plan until the next open enrollment.

He kept paying and waited for the date on his COBRA notice.

The clock

His Special Enrollment Period runs from 60 days before August 31 to 60 days after it. The day he picked a plan would set the day it started. A plan picked on or before August 31 would start September 1, the day after COBRA ended. A plan picked on September 10 would start October 1, and he’d go through September uninsured.

He started comparing plans in July and gave himself a deadline of mid-August.

Estimating his income

Since the fall of 2025, Mark has worked as an independent IT contractor, mostly for 2 dental offices and a property management company in the East Valley. The premium tax credit is based on household income for the whole calendar year. Mark lives alone, so his household is 1 person.

For self-employed people, HealthCare.gov’s guidance is to “include the income you expect to make from your business after expenses.” Mark took his invoices for January through July, added the work he had lined up for the fall, and subtracted what he expected to spend running the business. His estimate for 2026 was $55,000 in net self-employment income.

Bronze or Silver

$55,000 is about 351% of the poverty guideline for 1 person. That settled 2 things.

First, Medicaid wasn’t in the picture. Arizona expanded Medicaid, and adults qualify on income alone below 138% of the poverty guideline, about $21,597 for 1 person. Mark was far above it.

Second, he was over 250%, so he got no cost-sharing reductions. Those come only with a Silver plan, and only for incomes from 100% to 250%. Without them, he could weigh Bronze and Silver on the premium after the credit, the network and what he’d pay when he used care.

Premiums rise with age, and Mark is 54. His expected contribution doesn’t rise with his age: it’s set by his income. The credit covers the rest of the benchmark plan’s premium, whatever that premium is, and he can use it on any metal level.

There was one more thing on the Bronze side. From January 1, 2026, Bronze plans count as HSA-eligible high-deductible plans, so a Bronze plan can be paired with a health savings account.

He compared each plan’s premium after the credit, its network, and what he’d pay when he used care.

Picking a plan

On Monday, August 10, Mark logged in to HealthCare.gov. He reported that his COBRA coverage would end on August 31 because it had reached its maximum length. He listed his household of 1 and entered $55,000 as his expected income for 2026.

He picked a Bronze plan with his doctors in its network, and took the credit in advance, based on his estimate. His coverage would start on Tuesday, September 1. He’s now looking into opening a health savings account to go with it.

The paperwork

HealthCare.gov may ask for documents proving the event. If it does, he has 30 days after picking a plan to send them. He kept his COBRA notice, the page with the August 31 end date, ready to send.

The first months

COBRA ended on Monday, August 31, and his new plan started the next day. He went no days without coverage.

Contract income comes in unevenly, so on the first of each month Mark adds up what he has invoiced so far and compares it with his estimate. Enrollees must report income changes within 30 days.

In late September, his largest client asked him to quote a network upgrade for November. If he takes it, his 2026 income could climb toward the 400% line. He’ll know in October, and if his estimate changes, he’ll report it within 30 days.

The numbers

Step 1. Start with household income. Mark is a household of 1. His expected net self-employment income for 2026 is $55,000.

Step 2. Compare it with the poverty guideline. For 2026 coverage, the guideline for 1 person is $15,650. $55,000 divided by $15,650 is about 3.51, or about 351%.

Step 3. Check the Medicaid line. 138% for 1 person is about $21,597. $55,000 is far above it.

Step 4. Find the applicable percentage. For 2026, households from 300% to 400% are expected to pay 9.96% of income toward the benchmark plan. The percentage is the same across that band.

Step 5. Work out the expected contribution. $55,000 times 9.96% is about $5,478 a year. Divided by 12, that’s about $456 a month.

Step 6. Apply it to the benchmark. The benchmark is the second-lowest-cost Silver plan where Mark lives. He’s expected to pay about $456 a month toward it, and the tax credit covers the rest of the benchmark’s premium, whatever that premium is. On a plan priced above the benchmark, he pays the difference on top of that. On a plan priced below it, he pays less.

Step 7. Check cost-sharing reductions. At about 351%, there are none. They stop above 250%.

Step 8. Measure the room under 400%. 400% of the poverty guideline for 1 person is $62,600. $62,600 minus $55,000 is $7,600.

The credit has limits. It’s for household incomes from 100% to 400% of the poverty guideline, for people who aren’t eligible for other qualifying coverage such as Medicaid or affordable job-based coverage, and it comes with a plan bought through the marketplace. It’s based on an estimate, which his tax return settles.

What could have gone wrong

Leaving COBRA early. Had Mark dropped COBRA in the spring, or stopped paying it, he’d have had no Special Enrollment Period. Running out of COBRA opens a window. Walking away from it, after the first 60 days, doesn’t.

Picking after August 31. A plan picked in September would have left a gap of at least a month. Once the 60 days after August 31 had passed, with no other qualifying event, he’d have waited for open enrollment.

The 400% cliff. In 2026 there’s no credit above 400%. If Mark’s 2026 income came in at $63,000, just $400 over the line, it would be about 403% of the poverty guideline. He’d have no credit for the year and would repay every advance dollar at tax time. The IRS says: “There is no repayment cap for tax years after 2025.” That’s why the November job matters to him, and why he’ll report a change within 30 days. If his income comes in lower than his estimate, he may get more back.

Choosing Silver for savings that aren’t there. Above 250%, a Silver plan comes with no cost-sharing reductions. Silver is still an option, just not for that reason.

Letting the estimate drift. Enrollees must report income changes within 30 days. For a contractor whose income arrives in lumps, a monthly check keeps the estimate close to the truth.

Questions to work through

When does your COBRA end? Check your COBRA notice for the date. Your window runs from 60 days before it to 60 days after, and a plan picked on or before that date starts the first of the following month.

Are you thinking of leaving COBRA early? Inside the first 60 days after your job-based plan ended, you can still pick a marketplace plan. After that, dropping COBRA or stopping payments doesn’t open a window. You’d wait for open enrollment or for COBRA to run out.

How close is your income to 400%? For 1 person in 2026 coverage, the line is $62,600. Above it, there’s no credit for the year, and there’s no cap on what you’d repay.

Bronze or Silver? If your income is between 100% and 250%, a Silver plan comes with cost-sharing reductions. Above 250%, compare plans on the premium after the credit, the network and what you’d pay when you use care. Bronze plans count as HSA-eligible from 2026.

How many years until 65? Medicare is for people 65 or older. Until then, a marketplace plan can bridge the years, and your income each year sets what you’re expected to pay toward the benchmark. A licensed broker can check your window and your numbers with you.

The short version

Mark’s 18 months of COBRA in Phoenix ran out on August 31, 2026. Running out of COBRA was a loss of coverage that opened a 60-day Special Enrollment Period on HealthCare.gov, where dropping it early would not have. He picked a plan on August 10, so his coverage started September 1 with no gap. His estimate of $55,000 put him at about 351% of the poverty guideline, with an expected contribution of about $456 a month toward the benchmark Silver plan and no cost-sharing reductions, so he compared Bronze and Silver and chose Bronze. He’s $7,600 under the 400% line, and with no repayment cap from 2026, he reports income changes within 30 days.

This is a summary of how the rules work, not legal or tax advice. HealthCare.gov, your plan’s documents and your own tax situation have the final word.