Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a law passed by the U.S. Congress, that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving the job, even if you quit or are fired. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA).
COBRA allows an employee who has been fired, changed jobs, or got divorced the ability to continue their health insurance for a limited time. It also applies to the family of a deceased employee. There are some legal requirements and time limits, so it’s a good idea to investigate COBRA right away if you are in one of these circumstances. You have 60 days to enroll starting from the later of the date that coverage would have been lost or the date that the official COBRA letter was mailed. If you sign up during the 60 day period, coverage (and premiums) can be retroactive.
COBRA coverage can continue up to 18 months if you quit or a lose a job or your hours are reduced, and up to 36 months if the insurance loss was due to other reasons. In certain circumstances, such as the exhaustion of unemployment benefits or a disability, the COBRA coverage period may be extended by an additional 11 months.
In most cases, COBRA participants are typically required to pay the full cost of their insurance coverage, including both the employee and employer portions, plus a 2% administrative fee. It can be expensive.
COBRA is not the only option for individuals who have lost their employer-sponsored health insurance. They may also be eligible for coverage through the Health Insurance Marketplace or Medicaid.
Check to see if your spouse can get insurance at their job, or it’s often less expensive to sign up through the Affordable Care Act or your state’s health insurance marketplace. The listings are at http://healthcare.gov . The normal enrollment period is waved for most COBRA eligible people and you can sign up any time.