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.
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 and outpatient hospital care
- Physician care
- Surgery
- Prescription 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.