The COBRA decision, made in about a day
When employer coverage ends you are usually offered COBRA: the same plan, the same network, the same deductible progress — at the full unsubsidized cost, because the employer share goes away. It is continuity at a price.
Losing employer coverage is also a qualifying life event, which opens a special enrollment period on the ACA exchange. So at that moment you genuinely have three doors, not one.
| Option | Best when | The catch |
|---|---|---|
| COBRA | You are mid-treatment, have met a deductible, or cannot risk changing doctors | You pay the whole premium yourself, and it is time-limited |
| ACA exchange plan | Your household qualifies for a large premium tax credit or cost-sharing reduction, or health history makes underwriting risky | Guaranteed issue and community rated, so a healthy household pays the pool's price; networks are often narrower |
| Private underwritten plan | You are healthy, expect little or no subsidy, and want a national PPO network at a lower fixed cost — network size and access depend on the plan and your area | Health questions apply — a carrier can rate up, exclude a condition, or decline |
Availability, benefits, limitations, exclusions and rates vary by state and are confirmed at application.
Say the subsidy part out loud
Founder income in year one is often low, and that is exactly the situation where exchange subsidies are largest. If your household qualifies for a substantial premium tax credit or a cost-sharing reduction, that is very hard to beat and the exchange is usually your better financial choice.
Private coverage tends to win where there is little or no subsidy — a founder with savings, a working spouse, or revenue arriving faster than expected. We never ask your income or subsidy amount anywhere on this site, so you should check the exchange side yourself and compare it to what you see here. Private health vs ACA sets the two side by side.
Keeping fixed cost down before revenue
Pre-revenue, every recurring dollar is runway. The lever most founders reach for is a higher deductible, and it is a reasonable lever if you use it deliberately.
Published rates give you the honest floor. Bright Life's Copay PPO at the $3,500 deductible is $359 a month for a single adult aged 18–29 and $379 at 30–44 for qualifying applicants, on a nationwide Cigna PPO. LifeX on the PHCS PPO network at $1,500/$3,000 is $369 and $419 for the same bands. Your own rate depends on state, age, household and underwriting, and availability varies by state, carrier and plan.
Everything else we place is quote-required, and we will not estimate it. Full tables, including couple and family rates, are on private health insurance cost.
- Raise the deductible, do not drop the coverage. A high deductible is a budgeting choice. Being uninsured is not a plan.
- Know which network you are buying. An EPO network is generally far less forgiving out of network than a national PPO. See private PPO vs ACA networks.
- Consider a gap layer instead of a lower deductible. Pre-Med Defender GAP covers sickness and accident — not accident only — and sits on top of a plan rather than replacing it. Not available in AK, CO, HI, NY or WA.
- Do not mistake a supplemental product for major medical. "Private health insurance" is an umbrella term covering medically underwritten major medical style plans, fixed indemnity, ERISA and association coverage, short-term medical and supplemental products — they are not all ACA-compliant major medical. Fixed indemnity such as Medical Mutual Protect pays set amounts for day-to-day care and is normally paired with a catastrophic layer; on its own it is not comprehensive coverage. Availability varies by state, carrier and plan.
Covering a founder and a first hire
Two or three people is below the practical floor for a small group plan, and participation minimums make it worse rather than better. Most early teams therefore cover each household individually.
That is not a downgrade. Individual coverage belongs to the person, so it does not need to be re-set up when your headcount changes, and each household gets underwritten and priced on its own facts rather than averaged with yours.
What an employer is allowed to pay for, reimburse or require is an employment-law and tax question, and it is not ours to answer. Talk to your attorney or accountant before you set a policy. If you later grow past a handful of employees, small business owner health insurance covers the group-versus-individual math.
Underwriting when you are the whole company
A founder is a single point of failure, which changes how you should read the health questions on an underwritten application.
If you are in good health, underwriting is what makes the price attractive — you are not paying into a community pool. If you have a condition under active management, the outcome may be a higher rate, a rider excluding that condition, or a decline. No honest agent promises acceptance.
If underwriting closes the door, there is still a floor: Enrollment First SelectMed Bronze Pro is guaranteed-issue, membership-style coverage that nobody is declined for, available in all states except AK, HI, MA and NH. It is a floor, not a substitute for major medical, and we will describe it that way.
Timing: you are not locked out until November
Leaving a job opens an exchange special enrollment period, but those windows close. Private medically underwritten coverage generally has no annual enrollment window at all, so you can apply in any month of the year, subject to underwriting.
That matters because launches slip. If your special enrollment period lapsed while you were shipping a product, the private side is still open to you.
A short checklist for the month you go independent
Do these five things in order and the decision stops being stressful.
- Find out your actual COBRA cost in writing, not your guess at it.
- Check your exchange subsidy. If it is large, that is likely your answer.
- Price the private side for your household and state, and note which plans are even filed where you live.
- Check your own doctors and prescriptions in the specific plan's directory before applying — many providers participate, but no one can promise a named doctor is in network.
- Have a licensed USA Benefits Group agent with AO American Benefits write the application — consumers do not enroll themselves in these products online.