Understanding COBRA and Your Health Insurance

The Consolidated Ominbus Budget Reconciliation Act of 1985, better known as COBRA, basically provides the option for employees to continue their health insurance coverage for a specific period of time following the termination of their employment.

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The Consolidated Ominbus Budget Reconciliation Act of 1985, better known as COBRA, basically provides the option for employees to continue their health insurance coverage for a specific period of time following the termination of their employment. Typically, the COBRA coverage will last for a year and a half but there are some specific instances in which COBRA can be used for a longer period of time.

COBRA can be instated following termination for almost any reason, including voluntary termination and being fired. Even if the employee’s hours are only cut, thereby making him or her ineligible to continue the employer-based insurance, COBRA can become effective. One instance that many people overlook their option to continue COBRA coverage is upon the death of the insured employee. In that case, COBRA coverage can be continued for three years.

Generally, any health insurance plan you carry through an employer is subject to continuation through COBRA under the same terms. That means that children born (or adopted) to the insured during the coverage period are also covered.

One notable exception to the ability to continue your insurance coverage through COBRA is that most smaller employers are exempt from the requirement to offer the extended coverage. The federal government and some other plans are also exempt, but you should check with your insurance representative to be sure.