Group health plan coverage for state and local government employees is sometimes referred to as “public sector” COBRA to distinguish it from the requirements that apply to private employers. The landmark COBRA continuation coverage provisions became law in 1986.

One quirk of the U.S. health care system is the way it ties health insurance to the workplace. According to the U.S. Census Bureau, more than 55% of Americans get their health insurance through an employer — their own or a family member’s. The biggest problem with this arrangement is that if you lose your job, you lose your health coverage with it. Sometimes, people even stay at jobs they hate just because they need the health benefits — a phenomenon economists call “job lock.”

In 1986, Congress took its first step toward fixing this problem by passing the Consolidated Omnibus Budget Reconciliation Act, or COBRA. This law allows people who lost a job to keep their health coverage by paying all the premiums themselves. The coverage only lasts a limited time, but it helps tide people over until they can find a new job with health insurance coverage.

Today, COBRA isn’t as essential today as it was back in the 1980s. The health insurance marketplaces created by the 2010 Affordable Care Act (ACA) have made it much easier to find an affordable health insurance plan that’s not tied to work. However, COBRA coverage is still available, and it can offer a useful alternative to a marketplace plan in some situations.

How COBRA Coverage Works

COBRA is not a government-run health insurance plan like Medicare or Medicaid. It’s just a law that gives people extended access to coverage from private insurance companies. Essentially, it requires health insurance companies that provide group health plans to allow workers to continue their health coverage when they lose access to a plan from their workplace.

Workers can apply for COBRA benefits whenever they lose access to their group health plan. It doesn’t matter whether they’ve lost their jobs, left their jobs, or just reduced their work hours; if they had insurance from work and are about to lose it, they can keep it by paying the full cost themselves. And if the covered employee’s spouse and children were relying on the employee’s health plan, they can use COBRA to extend their coverage, as well.

The coverage COBRA provides is only temporary. In most cases, it lasts up to 18 months. However, in some circumstances (discussed below), former employees and their dependents can keep their COBRA coverage for up to 36 months. That gives them extra time to find a new job or become eligible for another source of health coverage, such as Medicare.

COBRA Eligibility

Under COBRA, insurers must offer continuation coverage for anyone who was covered under a group health plan and then loses coverage due to a specific event. This includes former employees and their spouses, former spouses, and dependent children.

To get coverage through COBRA, you must meet three main requirements:

1. Your plan qualifies for COBRA.
2. You have lost coverage due to a qualifying event.
3. You are a qualifying beneficiary.

Plans that Qualify for COBRA

Not all employees qualify for COBRA continuation coverage. The law applies only to people covered by group health plans, defined as plans provided by an employer to cover the cost of medical care for employees and their families. This includes health insurance plans, managed care such as health maintenance organizations (HMOs), and plans that pay for care directly out of the employer’s assets.

The definition of medical care is also important. Under the law, a group health plan can cover the cost of any or all of the following:

• Inpatient and outpatient hospital care
• Doctor visits
• Surgery
• Prescription drugs
• Dental care
• Vision care

However, life insurance and disability insurance are not considered medical care. Any plan that provides these benefits and no other health benefits is not eligible for COBRA.

Even if you definitely have a group health plan, that doesn’t guarantee you access to COBRA.