The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since employers typically pay part of the premium for active employees.

COBRA coverage usually costs the participant more, but often it is still less than an individual or family policy.

Group health plans subject to COBRA are those offered by employers that have 20 or more employees on more than 50 percent of its typical business days in the previous calendar year.

To be eligible for COBRA coverage, employees must have been enrolled in the employer’s health plan when employed, and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.

The plan administrator must provide notice to individual employees of their right to elect COBRA coverage within 14 days after the administrator has received notice from the employer. Eligible employees must respond to this notice and elect COBRA coverage by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later. Otherwise, the employee loses all rights to COBRA benefits.