What is COBRA?

COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985, federal legislation that allows you – if you work for an insured employer group of 20 or more employees – to continue to purchase health insurance for up to 18 months if you lose your job, or your employer-sponsored coverage is otherwise terminated (in some situations, coverage can continue for up to 36 months).

The insured is responsible for the full cost of the premiums (plus a 2 percent administrative fee) if COBRA is elected.

Before the bulk of the Affordable Care Act‘s provisions took effect in 2014, COBRA was often the only realistic option for people with pre-existing conditions who were leaving their job and losing access to their employer-sponsored health insurance. Prior to 2014, coverage in the individual market was medically underwritten in most states, making it difficult or impossible for people with serious pre-existing conditions to obtain.

COBRA is still available — the ACA didn’t change anything about that — but individual market coverage is now guaranteed issue for all applicants, regardless of their medical history, and losing access to an employer-sponsored plan is a qualifying event that triggers a special enrollment period in the individual market. So you can compare COBRA and individual market coverage to determine which one will be a better fit for your situation.

Related terms: employer-sponsored health insurance

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