If you recently lost your job, you don't have to worry about immediately losing your health insurance. You could be eligible for the continuation of your existing health insurance benefits.

The Consolidated Omnibus Budget Reconciliation Act of 1985, also known as COBRA, provides an extension of health insurance plans for qualified workers, their spouses and their dependent children when coverage might otherwise end. COBRA has provided a much-needed safety net for many families in the middle of a crisis, such as unemployment, divorce or death.

If you voluntarily resign or are terminated from a job for any reason other than "gross misconduct," you are guaranteed the right to continue your former employer's group plan for health insurance for up to 18 months. The coverage will be at your own expense. Your spouse and dependent children are usually included in the COBRA coverage, sometimes up to three years.

Individual plans are not subject to COBRA, you cannot get an extension on individual health insurance under COBRA.

Who is eligible for COBRA?

There are three groups of people which are eligible for COBRA coverage: employees or former employees, their spouses and their dependent children. COBRA is triggered in several cases.

You are eligible for 18 months of COBRA coverage if you leave a job voluntarily or are terminated or face reduced hours that eliminate your employer coverage. You, your spouse and child are all eligible in this circumstance.

If you are an employee entitled to Medicare, divorcing or going through legal separation or if an employee passes away, the spouse and dependent child are eligible for 36 months of COBRA coverage. If a dependent-child looses that status, the dependent child is eligible for COBRA coverage for 36 months, as well.

Your spouse or any dependent children may enroll in COBRA independent of your decision to enroll. If you forgo COBRA, any of your family members may participate in it.

COBRA extends beyond private businesses to workers in state and local government, as well as workers who are independent contractors. The law does grant an exemption from COBRA continuation rules to the District of Columbia, federal employees, certain church-related organizations and firms that employ fewer than 20 people. The IRS says that employers must include part-time employees into their employee total to claim COBRA exemption.

If you work for a small company that is exempt from COBRA, you may still qualify for coverage. Many states have adapted "mini-COBRA" laws that grant broader rights in determining the eligibility for coverage.

You must already be covered by an employer health plan to qualify for COBRA benefits. If your employer has over 20 workers but does not offer health coverage, you and your family won't be eligible for COBRA.

COBRA coverage ends when you reach the last day of maximum coverage. If you fail to pay your premiums or your employer stops offering a group health plan to employees, you will lose the coverage. If you obtain other employer group health insurance coverage that does not contain any exclusions with respect to pre-existing conditions, you will no longer be eligible. If you become entitled to Medicare benefits, your coverage will end.

How do you pay for COBRA?

The coverage you are eligible for under COBRA must be identical to the coverage you had when employed. An employer cannot allow you to choose a less expensive plan. However, you do have the option of dropping extra benefits, such as dental and vision plans. If your employer offers three different health plans, such as one for hospitalization, one for prescriptions and one for medical, you can elect which coverage you wish to continue.

Health plans subject to COBRA include:

-Dental, visions and prescription drug plans.
-Medical plans.
-Drug and alcohol treatment programs.
-Employee Assistance Plans.
-On-sight health care.
-Section 125 spending arrangements.

Plans not subject to COBRA include:
-Wellness programs.
-Life, disability and long-term care insurance plans.
-Medical Savings Accounts.
-EAPs that do not provide medical care.

You will not be only paying your share of the health insurance under COBRA, but the total cost. In fact, you could be charged up to 2% over the normal group premium. This helps the employer offset the extra administrative costs. This can be quite a bit more if your employer is fairly generous in the provision of health insurance.

If the premiums for the employer's group increase, your premiums will increase as well. The COBRA plan must allow you to pay your premiums on a monthly basis. However, neither the health plan nor the employer are required to send you monthly premium notices. It is your responsibility to make sure you pay attention to due dates.

If you have no pre-existing conditions and decide against COBRA, you can buy individual insurance or short-term major medical coverage to cover the gap between jobs.

The rules for COBRA continuation

If you plan to utilize your COBRA, you and your former employer must both follow proper procedures to initiate your coverage.

The employer is required to notify the health insurance administer within 30 days of the employee's qualifying event. In the case of divorce, legal separations or a child's loss of dependent status, it is your responsibility to notify the health plan administrator within 60 days of the qualifying event.

The plan administrator has 14 days after receiving notification to alert you about your right to elect COBRA. If the plan administrator fails to contact you, he or she will be held liable for a breach of duties. However, the administrator must have your correct and full mailing address to be held personally accountable.

You have 60 days to decide whether or not your family elects to buy COBRA. This period begins from the date your eligibility notification is sent to you or the date that you lost your health insurance coverage, whichever is later. Your COBRA will be retroactively applied to the date that you lost your benefits.

If you choose not to buy COBRA, you still have the remainder of your election period to change your mind. The coverage would not begin on the date of leaving the insurance plan, but on the date that you decided to take the coverage.

If you elect to purchase COBRA, you must pay your first premium within 45 days. The premium will cover the period retroactive to the date coverage ended with your employer, making the first payment unusually high. Your next payments are due according to the health plan schedule, but COBRA does allow for a 30-day grace period after each due date for payment.

If your COBRA payment is short by a small amount, usually around 10% or $50, the employer must accept the payment in full or notify you of the deficiency. You will then be given 30 days from the date of the notification to correct the deficiency.

The times set on COBRA are simply minimum guidelines for coverage. There is nothing that says that your coverage can't extend beyond the mandated period.

New employees must be given a general notice about their COBRA rights. The information must also be included within the summary of the health plan description that you receive when first getting the employer group insurance coverage.

If your employer offers an open enrollment period to the active employees while you are on COBRA, you will also be given the option to switch plans during the open enrollment period. You will be allowed the same options of active employees, including the option of adding new dependents.

If the health plan gives you the option of converting from a group plan to an individual plan under COBRA, you must be allowed to convert within 180 days before COBRA ends. You will be subject to individual rates, and your HIPAA protections could be weakened by switching.

If you move outside of your COBRA health plan's coverage are, you lose your COBRA benefits. The employer is not required to offer you a health insurance plan in your new area of residence.

Employees eligible for Social Security Disability benefits may receive COBRA for 29 months.