Consolidated Omnibus Budget Reconciliation Act

The Consolidate Omnibus Budget Reconciliation Act of 1985, or COBRA, is a bill passed under the Reagan administration to provide insurance for United States citizens after leaving employment. Although the bill was officially passed in 1986, it is still referred to as the COBRA act of 1985. This includes employees that have been terminated from employment, have changed employers, or have become disabled.

COBRA insurance benefits may also be applied to the immediate family of the employee receiving those benefits. COBRA requires employees coverage to be extended to employees, their spouse and dependent children after having left employment due to certain circumstances. It also applies to a majority of federal health plans

Inpatient hospital care;

Outpatient hospital care;

Surgery;

Prescription drugs;

Dental care;

and Vision care.

Health care provided under the Consolidated Omnibus Budget Reconciliation Act is not designed to be permanent. Benefits may last for a period of 18 months up to a total of 36 months. The family of COBRA beneficiaries may receive benefits for period of time up to 36 months. This includes dependent children, children older than the age of dependency but have a disability, and spouses (married, divorced or widowed).

During the period of coverage, beneficiaries may be required to pay a rate of coverage totaling their original payments, the payments of the employer, and an additional 2 percent for administration costs. Rates may also increase if the health plan's rate increases. However, COBRA rates are generally set in advance for a period of a year. Payments can be made monthly, quarterly or weekly. If a beneficiary is unable to make their payments after a certain period of time, that beneficiary will lose COBRA benefits.

COBRA insurance benefits can be in conjunction with other health care providers, such as The other coverage is required by COBRA or was received prior to COBRA benefits;

or, the other coverage is being received due to a pre-existing medical condition.

In 2009, the American Recovery and Reinvestment Act (ARRA) made it possible for the cost of COBRA insurance benefits to be subsidized for a period of 9 to 15 months. The subsidy rate may be up to 65 percent of the cost of benefits. The ARRA only applies to employees that were victims of involuntary termination. ARRA was designed to end on December 31, 2009, but was later extended to end on March 31, 2010. Under the Continuing Extension Act, ARRA subsidized rates continue through June 2, 2010.

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