• The federal COBRA program lets laid-off workers continue their company health insurance.street hobo image by Alexey Klementiev from Fotolia.com
  
  COBRA stands for the Consolidated Ombudsman Budget Reconciliation Act. It's a federal law governing the extension of employer health insurance after a job loss and went into effect in 1986. The law states that when a person with employer-sponsored health insurance loses his job, he's able to temporarily continue his coverage by paying the full premium rate. The 2009 American Recovery and Reinvestment Act (or federal stimulus law), as amended by the Temporary Extension Act of 2010, reduces the premium rate for individuals getting extended coverage through COBRA.
  
  

Eligibility

• To be eligible for the COBRA extension, a person must have received group health benefits as an employee of a company. An employee who loses her job for reasons other than misconduct or whose hours have been reduced can obtain COBRA coverage. The coverage can last up to 18 months and sometimes longer, depending on the circumstances. The U.S. Department of Labor (DOL) provides details about COBRA benefits and eligibility on its website (see Resources).
  
  

Benefits

• COBRA is a good option for people wanting to maintain health coverage, because group health insurance plans are generally cheaper than individual ones. Group health insurance plans can be purchased only through an employer or other organization.
  
  

Payment

• Under COBRA, the amount a former employee pays for group health insurance is more than the amount paid by a company employee. This is because the non-employee must pay both the employer portion and the employee portion of the plan's cost. Instead of sharing the premium cost with the company, the non-employee pays the full premium.
  
  

Premium Rates

• Health insurance premiums are on the rise for both group and individual benefit plans and are expensive already. A person who loses his job and is on a limited income doesn't necessarily have the financial resources to continue coverage, even with cheaper premium rates from a group plan. For this reason, some people are forgoing the COBRA option and have no health insurance while they're out of a job.
  
  

Federal Stimulus Laws

• To make COBRA a financially feasible option so people can continue their health coverage, last year's federal stimulus law offers premium assistance. Under the 2010 Temporary Employee Extension Act, people eligible for COBRA pay only 35 percent of their group health insurance premium. The remaining 65 percent is paid to the insurance provider through a tax credit. People receiving COBRA benefits beginning on or after Feb. 17, 2009, can get this premium reduction, which runs for up to 15 months.