COBRA

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act (opens in new tab). This piece of legislation provides employees and their families the option of staying on an employer’s group health insurance plan for 18 - 36 months after a change in employment.

COBRA generally takes effect when you lose or quit a job. It can also come into play if your hours are reduced, you’re transitioning between jobs, or you’re impacted by a significant life event like divorce or death.

Your employer has to give you at least 60 days to sign up for COBRA after you become eligible. If you have multiple people on your group plan, each person can individually decide to continue coverage through COBRA or not.

While you can keep your group health insurance through COBRA, this legislation doesn’t guarantee your employer will keep paying money toward your premiums. If you qualify for continuation coverage, you’ll be required to pay the your plan’s full premium amount – which may be more expensive than buying a new health insurance plan directly. It’s a smart idea to do some research (opens in new tab) before you sign up.

Additionally, your health plan may change or be terminated if your employer decides to offer different insurance plans from one year to the next, or stops offering health benefits altogether.

In most states, businesses with more than 20 employees are required to offer COBRA continuation coverage, but there may be additional requirements for smaller companies depending on where you live. Talk to your employer to see what your options are.