Leaving a job can mean more than the loss of income; it can also mean the loss of health insurance. Fortunately, there is a way to continue your group coverage even after your employment ends. COBRA offers the opportunity to maintain your current employer-sponsored health insurance for 18 months or more.

Understanding COBRA health insurance

COBRA gets its name from the Consolidated Omnibus Budget Reconciliation Act which was passed by Congress in 1986. The law gives individuals the right to continue their group health insurance after a qualifying event that could result in the loss of coverage. Only those working for employers with at least 20 employees are eligible, and qualifying events include a reduction in work hours or the voluntary or involuntary termination of employment for reasons other than gross misconduct.

In most cases, COBRA health insurance can be purchased for 18 months. Individuals who become disabled within 60 days of beginning their COBRA coverage may be eligible for an additional 11 months of continuing coverage. Spouses who could lose their insurance because of a divorce may elect to have coverage for up to 36 months.

Pros and cons of COBRA medical coverage

While employers often cover all or a portion of health insurance premiums for their employees, the entire cost of COBRA coverage must be paid by beneficiaries. Employers are also allowed to add a two percent administrative fee to the monthly premium price. Although COBRA health insurance can be expensive, it generally costs less than comparable coverage on the individual health insurance market.

In addition, COBRA provides a health insurance option for those who may be uninsurable elsewhere. While federal health reform prohibits insurers from denying coverage for children with pre-existing conditions, individual health plans can currently turn down adult applicants. In 2014, adults will receive the same protections as children, but in the meantime, COBRA plans offer an insurance option for those with pre-existing conditions.

Qualified individuals are guaranteed coverage so long as they pay their premiums in a timely manner and their former employer continues to offer group insurance to their employees. In the event an individual becomes eligible for Medicare or another group health insurance plan, COBRA coverage would be discontinued.