What is COBRA?

COBRA continuation coverage allows employees, as well as their spouses and dependent children to temporarily remain on an employer-sponsored plan. COBRA is extended for qualifying events unrelated to gross misconduct. Such events include voluntarily or involuntarily termination, change in status from full-time to part-time employment, divorce or legal separation, and the death of a covered employee. COBRA is also extended to spouses and dependent children if a covered employee becomes Medicare-eligible.

Those who wish to take advantage of COBRA must have been previously through their employer. Generally, it is available for 18 months and must be elected within 60 days of the qualifying event. The coverage remains the same; however, the individual is responsible for the entire premium plus 2 percent for administrative costs.

According to the 2009 Kaiser/HRET Employer Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $4,824 annually. At 102 percent for COBRA, monthly premiums reach nearly $410.

Those who foresee many medical costs may want to compare COBRA premiums against other plans whose deductibles, copays and prescription drug charges may add up, making COBRA a better option.

For more information about COBRA, read this FAQ from the U.S. Department of Labor