What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (or COBRA is a federal law that provides employees and their families the right to choose continuing group health benefits provided by a group health plan for a limited time after losing health benefits from their employer. It may be offered in circumstances such as the loss of a job, reduction in work hours, a transition between jobs, or major life events such as death and divorce. Group health plans must provide coverage under COBRA if they are maintained by state or local governments, or if they are maintained by private-sector employers with at least 20 employees. Most COBRA coverage lasts from 18 to 36 months, although this varies based on the qualifying event.

Although COBRA helps individuals maintain coverage, it can be financially unaffordable for many families because it requires payment of the full premium of up to 102% of the plan’s cost. It is typically more expensive than the cost of coverage for active employees since employers tend to pay for a large portion of employees’ coverage. Most individuals will usually receive a notification informing them that COBRA coverage will be available to them. In most instances, individuals who are eligible for COBRA have 60 days to select coverage after they are notified. If they are not eligible for COBRA, contacting the state insurance commissioner’s office may provide more insight into alternative coverage options which are available, such as mini-COBRA laws or other laws that are similar to the general provisions of COBRA.

Sources

“Continuation of Health Coverage (COBRA)”. U.S. Department of Labor. https://www.dol.gov/general/topic/health-plans/cobra 

“FAQs on COBRA Continuation Health Coverage for Work”. U.S. Department of Labor. https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-coverage.pdf