What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA), which was passed in 1985, is a federal law that helps to ensure those who lose their health insurance coverage due to life events, such as losing a job, can continue to receive their coverage for a pre-determined amount of time.

More About COBRA

With COBRA you are guaranteed the right to continue your health insurance for up to 18 months from your final day of employment. You will be covered when leaving or being terminated from your position in most cases, except those that are considered gross misconduct. What is important to know about the Consolidated Omnibus Budget Reconciliations Act coverage is that, although you are usually entitled to continue your previous health care coverage, you must pay for it out of your own pocket. There will be no employer contributions if you had benefited from such while employed. For this reason, COBRA insurance can be very costly. It’s not unusual for families or individuals to opt out of coverage due to its prohibitive cost.

If you are able to afford the costs of the Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance, your family members may be eligible for up to 36 months of coverage under the program. It’s important to note that you cannot get COBRA individual health coverage plans outside of your employer’s group or sponsored insurance.

COBRA Provision

When you undergo a qualifying life event such as leaving your employer or being terminated, you want to be sure to see your company’s Human Resources Department or benefits specialist in order to ensure you qualify for COBRA. Usually, you only have from between 30 and 60 days to do so, depending on your situation. As soon as HR is notified of your loss of employment, they are required to let you know about your coverage options under COBRA. You can decide whether to enroll each qualified beneficiary or not, depending on your needs and budget. At this meeting, you should also be able to take care of arranging payments for continued coverage.

While coverage can be extended to the employee for 18 months and dependents for up to 36 months depending on individual situations, there are events that can lead to coverage being discontinued. If the employer no longer offers group healthcare to its employees, COBRA will cease also. Likewise, should the company close or go out of business, you will no longer be covered under COBRA. If you neglect to pay your premiums or get coverage from a new job, you will lose your coverage. In addition, if you qualify for Medicare, COBRA will not cover you.

Whether to enroll in COBRA is a decision that only you can make. However, it might be a good idea to consider it at least temporarily while you look into other options. This way, you won’t find yourself and your family going without health insurance, which can be even more costly than the COBRA premiums. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a temporary way to continue receiving the same health benefits you enjoyed while employed should a life event cause you to lose coverage.