What is COBRA?
The term "COBRA" is commonly used to refer to certain provisions of Title X of the Consolidated Omnibus Budget Reconciliation Act of 1986. This law provides an opportunity for employees and their dependents who have been covered by an employer-sponsored health insurance plan to continue coverage under circumstances where such coverage might otherwise have been terminated. The covered employee is entitled to COBRA coverage only in cases of termination or reduction in hours. In addition, there are several situations in which an employee's spouse and dependent children may be eligible for COBRA benefits. The duration of COBRA coverage is limited and depends on the reason why existing coverage is being terminated.
COBRA can be an invaluable resource, particularly for those who find themselves without health insurance due to circumstances beyond their control (e.g., layoff or reduction in working hours). Because individual health insurance is generally much more expensive than comparable group insurance, many of these individuals might otherwise be forced to go without health insurance. This can be a dangerous gamble. COBRA provides a way to retain health insurance coverage at a reasonable rate.
Now that comprehensive health-care reform has been signed into law, how will it affect you? While some portions of the law become effective in 2010, other provisions are phased in over time. Nevertheless, it is almost certain that at least some of these reforms will have an effect on you and your family.