What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was signed into law on April 7, 1986 by Ronald Reagan. COBRA allows former employees to continue their current health coverage after leaving their job, which ensures uninterrupted healthcare access and provides the same benefits while retaining the same doctors they had while employed. This law was designed to help individuals maintain health coverage during job transitions, providing a safety net for millions of Americans.

How Does COBRA Work?

When a former employee chooses to opt in for COBRA, they agree to pay the full cost of their health insurance plan, including the portion their employer previously contributed, plus a 2% service fee. By opting in, they will be able to retain the same plan they had while employed, with the same network of doctors and coverage benefits.

COBRA Qualifications

There are many ways for someone to qualify for COBRA. These include:

• Voluntary or involuntary loss of employment, which removes access to employer-sponsored health coverage
• A reduction in hours worked that results in the employee no longer being eligible for their employer's health insurance coverage
• A divorce that leads to the loss of health coverage previously provided through a spouse's employer-sponsored plan
• Death of a spouse, which results in the surviving spouse losing access to health coverage that was provided through the deceased spouse's employer
• Reaching the maximum age limit (which varies by state) to remain as a dependent on a parent's employer-sponsored health insurance plan

Duration and Cost of COBRA

COBRA coverage is temporary, and can last between 18 and 36 months, depending on the reason for losing your previous coverage. COBRA coverage also typically costs double the price of your previous plan, and can reach up to 4 times the price of your previous plan! This makes COBRA coverage unaffordable for the average American worker, especially a worker who has their family covered under their employer plan.