What is COBRA Insurance?

Updated on October 11, 2023

  1. OnPay
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  3. Terms and Definitions
  4. COBRA

COBRA definition and meaning

COBRA is short for the Consolidated Omnibus Budget Reconciliation Act, which gives employees the ability to hold onto health insurance after leaving a job. The option for COBRA coverage typically lasts for a limited time — up to 18 months after an employee is terminated, laid off, or faces reduced hours.


More about COBRA

When an employer offers health insurance and has more than 20 employees, it is required under COBRA to offer a continuation of coverage COBRA insurance when an employee leaves the company. COBRA was created to give workers who lose a job — whether voluntarily, through a layoff or a termination — the right to continue to receive health benefits for a limited time. Employees that experience a reduction of work hours may also use COBRA benefits. And while the coverage period is generally 18 months, it can extend to 36 months when specific qualifying events occur.


Examples of what COBRA can help with include costs toward prescription drugs, dental treatments, or vision care. COBRA usually does not cover costs associated with life or disability insurance.

Using in a COBRA sentence

“After the employee’s position was terminated, she and her family secured continuation of their health coverage through COBRA until she found a new job.”

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