What is COBRA?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It is a federal law that ensures individuals, and sometimes their families, can continue their health insurance coverage after leaving employment, provided they meet certain criteria. This law typically applies to employees of companies with 20 or more employees and grants the ability to maintain the same group health insurance benefits for a limited time, usually 18 months, after a qualifying event like job loss, reduction in hours, or other circumstances that would lead to the loss of coverage.

This extension of coverage is essential for individuals who may be transitioning between jobs or seeking new employment, as it provides a critical safety net that helps avoid gaps in health coverage during a potentially vulnerable period. The other options presented do not accurately define COBRA; they pertain to different aspects of healthcare and insurance that are not related to the continuity of health coverage after employment termination.