COBRA basics

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law passed in 1986 that lets certain employees, their spouses, and their dependents keep group health plan (GHP) coverage for 18 to 36 months after they leave their job or lose coverage for certain other reasons, as long as they pay the full cost of the Premium Premium A premium is an individual’s monthly payment to a Medicare or other health insurance plan for coverage. .

Under COBRA, a GHP is defined as a job-based insurance plan that provides medical benefits to employees, their spouses, and/or their dependents. Medical benefits may include:

• Inpatient Inpatient An inpatient is a patient who has been formally admitted into the hospital by a doctor. Most inpatient care is covered under Medicare Part A (hospital insurance). and Outpatient Outpatient An outpatient is a patient who has not been formally admitted into the hospital as an inpatient. Most outpatient care is covered under Medicare Part B (medical insurance). hospital care
• Physician care
• Surgery
• Prescription Prescription A prescription is an order for a health care service or drug written by a qualified health care professional. drugs
• Other medical benefits, such as dental and vision care

Note: Life insurance is not covered under COBRA.

The federal COBRA law generally applies to job-based insurance from employers with 20+ employees in the prior year. It applies to health plans in the private sector and those sponsored by state and local governments—but not those sponsored by the federal government and certain faith-based organizations.

Some states extend rights similar to COBRA to people who would not otherwise be eligible for COBRA, such as people from companies with fewer than 20 employees. Contact your State Department of Insurance to learn more about rights and options in your state.

As you make COBRA-related decisions, keep in mind that health coverage under COBRA is typically expensive because it tends to be comprehensive and you may pay the full cost of the premium yourself (though employers often pay part of the premium for current employees). However, COBRA coverage may be less expensive than similar individual health coverage.