What Is COBRA?
Most people are familiar with the term COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act. It refers to paying for health insurance that was in effect when an employee lost their job. It also applies if a family member loses access to the group plan.
COBRA serves as a bridge for individuals in transitional phases of their lives, ensuring they don’t face a health coverage gap. Whether due to job loss, reduced working hours, or significant life events like divorce, COBRA provides an option to maintain the same health insurance coverage they previously had.
While COBRA coverage offers the advantage of maintaining consistent health insurance, it often comes at a higher cost. Unlike employer-sponsored plans where the employer usually subsidizes a portion of the premium, with COBRA, the individual typically covers the entire premium amount. In some cases, an additional 2% administrative fee may also apply.