What Is COBRA?

What is COBRA? It has nothing to do with the reptile world and everything to do with health insurance.

Understanding how COBRA works will come in handy if you leave or lose a job for almost any reason. Here’s the lowdown.

What Does COBRA Stand For — And What Is It?

COBRA is another name for the Consolidated Omnibus Budget Reconciliation Act. This federal law went into effect in 1985 and allows people who lose their jobs to continue their employer-sponsored healthcare coverage temporarily. You can continue your same health insurance coverage for a set amount of time after leaving the company. You have 60 days to enroll in COBRA, or your coverage will end when you leave the employer.

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Who Qualifies for COBRA?

Private employers are usually required to offer COBRA coverage if they have more than 20 employees. State and local government employers also typically have to offer COBRA. However, individual employees also have to qualify. If you're covered by your employer's health insurance plan, you'll qualify for COBRA if you no longer have your job due to:

• Quitting
• Getting laid off
• Retiring
• Being fired, unless it's for gross misconduct
• Having your hours decreased so much that your employer doesn't have to include you in the group insurance plan

Dependents of people who qualify for COBRA can also get coverage. Spouses of employees might have the option to get COBRA coverage if they divorce an employee who's on the group plan or their spouse dies while being covered by the group plan.

How Long Can You Get Health Insurance Coverage From COBRA?

You can get COBRA coverage for anywhere from 18 to 36 months, depending on the qualifying event. Those are the minimums, but some plans might offer a longer coverage period.

How Much Does COBRA Cost?

The cost of COBRA coverage varies based on your employer's plan costs. You'll likely pay more for COBRA coverage, even though it's the same plan, since many employers pay at least a portion of the premiums. Once your COBRA coverage starts, you'll likely have to pay the entire premium. The maximum you can be charged is 102% of the costs other people are paying on the plan. You can check your current total premiums without the employer's contribution to get an idea of what you might pay.