COBRA insurance is not a specific type of insurance, but rather a provision in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) that allows people in the US to continue receiving health insurance after changes in circumstances. It is usually more expensive than health insurance at the time of hire, but less expensive than without the provision. COBRA insurance covers medical care, prescription drugs, surgery, inpatient care, outpatient care, and dental needs, but not life insurance. Eligibility depends on the size of the employer, with those working for companies with fewer than 20 employees not eligible.
There is actually no specific type of insurance called Cobra insurance. Rather, the term comes from a provision in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which became law in the United States in 1986. The act provides a way for many people in the United States to continue receiving health insurance for a period of time after they have had changes in their circumstances, such as job loss or divorce, that would have left them without coverage. This continuation of insurance benefits is often referred to as COBRA insurance.
costs
COBRA insurance is usually more expensive for people who have it than their health insurance at the time of hire, but it is less expensive than it would be without the COBRA provision. Most employers pay at least a percentage of health insurance costs for their employees, and many companies are required to do so by law. A person who has COBRA insurance, however, must pay all costs themselves.
The provision in COBRA, however, allows the individual to continue their insurance coverage at the group rate received from their employer instead of paying an individual rate. Groups may receive discounts from insurance companies, so a person covered by COBRA insurance is usually able to pay a lower rate. So, an employee who is suddenly unemployed may see their healthcare costs rise, but thanks to COBRA, they can avoid paying even higher costs.
Users
People who, for some reason, have lost their primary means of health coverage are the primary users of this benefit. The most common example of this is the loss of a job. COBRA insurance also covers recent retirees and people with disabilities. It usually also covers the person’s spouse and children, if applicable.
Covered benefits
Specific health benefits that are often included in COBRA insurance packages are medical care, prescription drugs, surgery, inpatient care — both inpatient and outpatient, but usually not extended stay care — and even dental needs. Life insurance, which may be offered in conjunction with employer-provided health insurance packages, is not part of any COBRA insurance package.
Eligibility
The COBRA provision does not cover all workers in the United States. For example, someone who worked for a company that had fewer than 20 employees in the previous year would not be eligible. Not even those who were employed by the US federal government or by some religious or church-sponsored organizations. State and local government employees, however, would be eligible.
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