See the pros and cons of ACA, COBRA, short-term coverage and how cost-sharing plans work.

Rising health insurance premiums have a lot of people exploring their options. Here’s a look at the most common plan types and how cost-sharing plans differ from insurance.

Marketplace plans

People who don’t have employer-sponsored health insurance, including many small business owners and freelancers, often turn to Marketplace plans. Established by the Affordable Care Act (ACA), Marketplace plans offer three tiers of coverage: bronze, silver and gold. In 2025, over 500,000 Michiganders signed up for ACA plans through HealthCare.gov. The last day to sign up for coverage that starts on January 1, 2026, is December 18, 2025.

Pros: These plans are the only way to get the Advance Tax Premium Credit, a subsidy that makes health insurance affordable for many people. (You can purchase a Marketplace plan even if you don’t qualify for a credit.) Also, no one can be denied coverage for pre-existing coverage. Qualifying high-deductible plans allow you to set aside pre-tax dollars in a health savings account (HSA).

Cons: Some plans restrict which providers you can see. Depending on which plan you choose, the deductible and out-of-pocket maximums can be quite high. Bronze and silver plans have the highest out-of-pocket costs. Enrollment is restricted to November 1 through January 15, or when you have a life event such as a move, get married, have a baby or adopt a child.

COBRA coverage

COBRA refers to the law that allows employees to continue the health insurance coverage they had with an employer after they leave a job, or when a spouse loses coverage due to divorce from the employee or the death of the employee.

Pros: You continue with the coverage you had before. This means access to the same providers, and the deductible and limits remain the same. You get 60 days from the qualifying event to elect coverage and coverage is retroactive, so there’s no gap. If you’ve met your deductible for the year, staying with COBRA could cost less than a comparable Marketplace plan.

Cons: The biggest drawback to continuing coverage through COBRA is the cost. You must pay the entire premium (the employer’s share plus the employee’s share) plus a 2% administrative fee. There’s a limit to accessing COBRA health insurance of 18 to 36 months. Also, COBRA only applies to employers with 20 or more employees.

Short-term health insurance plans

Many people use short-term plans to bridge a gap in coverage due to events like hitting age 26 and no longer being eligible for coverage on your parent’s plan or being between jobs. Many people use short-term plans as a lower-cost alternative to COBRA coverage. For many people they’re a more budget-friendly option but the coverage is not as robust as Marketplace or most employer plans.

Pros: These plans are flexible and there are no special enrollment periods. You can sign up for short-term health insurance at any time and coverage begins immediately. You can also cancel it at any time without penalty. If you use in-network providers you’ll get lower rates for care.

Cons: In Michigan, short-term policies are limited to a coverage period of 185 days out of any 365-day period with the same insurer. If you’re planning to move out of state, your new state may allow short term polices up to 36 months or they may not allow them at all. Pre-existing conditions may not be covered, so if this is a concern for you or anyone who will be covered on the policy be sure to read the policy rules before you sign up. Short term policies are not required to cover the essential services, like preventive and maternity care, that are standard in Marketplace plans.

Cost-sharing organizations are not insurance

Health cost-sharing organizations operate on a model of cooperation and support among members. Often they are run by faith-based communities and may require members to adhere to a specific faith or set of beliefs. As a group, members agree that they’ll pay a certain amount each month that goes to pay other members’ bills. If you have medical bills, you submit them and request reimbursement. However, cost-sharing plans are not insurance and are not subject to health insurance regulations.

Pros: Many people use cost sharing because it’s a way to practice their faith and care for others. Compared to health insurance, cost-sharing plans cost significantly less. Also, members can choose any providers they like and are not restricted to those within a network.

Cons: Coverage options can be limited and it’s not unusual for cost-sharing plans to exclude pre-existing conditions. The ability to get bills paid depends on the participation of the other members. There’s no guarantee members with bills will be reimbursed. Since there’s no oversight or standardization of cost-sharing practices, members have little recourse if their claim is denied.

The health insurance you choose will have significant effect on your finances. The Michigan Department of Insurance and Financial Services has more tips on shopping for a plan.