COBRA (Consolidated Omnibus Budget Reconciliation Act) allows employees and their families to temporarily continue group health coverage after events that would otherwise end eligibility. This provides a bridge until other coverage is obtained but at significant cost to the individual.
Qualifying Events
COBRA coverage triggers include voluntary or involuntary job loss (except for gross misconduct), reduction in hours, death of covered employee, divorce or legal separation, dependent child aging out of coverage, and Medicare entitlement of covered employee.
Coverage Period
COBRA coverage generally lasts 18 months for employment termination or hours reduction. Some qualifying events allow 36 months. Certain circumstances can extend coverage further. Coverage ends early if premiums are not paid or the individual gains other coverage.
Cost
COBRA participants pay the full premium cost plus a 2% administrative fee. Without employer subsidies, this is often substantially more than employees paid while employed. The high cost leads many to seek alternatives like marketplace coverage or spouse's plan.