Consolidated Omnibus Budget Reconciliation Act - COBRA

You've worked at the same company for five years. They've paid you a nice salary, you get ten vacation days a year, and—most importantly—you have health insurance for you and your family. Then you find out that the CEO's mistress has cleared out all of the company’s bank accounts and exposed a wealth of crimes committed by the executives.

Your company evaporates overnight. “What are you going to do about your health insurance?” will be the very first question your mother asks you when you relay the news.

Luckily, the U.S. government passed a law called the Consolidated Omnibus Budget Reconciliation Act (or COBRA) back in 1985. This law created a mechanism for continuous health insurance coverage for workers should they meet certain qualifying conditions. These qualifying events, which require individuals to pay the full premiums they have for upwards of 102% of the cost, include both voluntary and involuntary job losses, a decline in work hours, death of the policyholder, and divorce of the policyholder.

Individuals may qualify for up to 18 months of coverage, although extensions are possible.