COBRA became law in 1986 through the Consolidated Omnibus Budget Reconciliation Act. COBRA insurance provides a continuation of health insurance benefits for employees who leave under circumstances that don’t include gross misconduct. While the former employee can generally expect the same coverage that he or she received while employed, upon termination the monthly premiums will likely increase due to the discontinuation of the employer’s contribution to the health insurance premium. Spouses and children are covered under COBRA as well, as long as they were added to the policy before the termination date. Just like any insurance plan, there are pros and cons to COBRA insurance that are dependent on your situation.
You can keep your current health benefit plan, even when you no longer are an employee at your company.
As a former employee, you are responsible for the entire monthly premium for your health insurance once you are on COBRA. While your employer likely made contributions to your health insurance premium costs during your employment, that ends at termination. It’s possible that private insurance could be a better option because of this increased monthly cost. Additionally, not all terminated employees qualify for COBRA, so private insurance may offer the only protection against a lapse in health coverage in between jobs.