Information from the Department of Labor

I got this list from the DoL and thought some might find it useful. I also heard that part of the stimulus plan would subsidize 65% of your COBRA monthly costs. If you can, I would recommend checking with your previous employer to find out more information.

What is COBRA? COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act, a 1986 federal law that allows for the temporary extension of group health coverage to people whose health benefits otherwise would be terminated.
 
What does COBRA do? It allows certain employees, retirees, spouses, former spouses and dependent children to continue health insurance coverage at group rates for specifics time periods. To be eligible, a person must have been enrolled in their employer's health plan when he or she was working for that particular company.
 
When does that coverage take effect? COBRA becomes available when an individual covered by a group health plan loses health insurance coverage because of a "qualifying event;" e.g., when an active employee's hours are reduced or job is terminated for reasons other than a person's gross misconduct. Spouses and dependent children may become COBRA-eligible when a covered employee's job is terminated or hours are reduced; when the employee becomes eligible for Medicare; upon the employee's death; or in the event of divorce or legal separation from a covered employee.
 
How long does COBRA coverage last? COBRA begins on the date when a qualifying event triggers the loss of the health coverage. The law allows up to 18 months of continued coverage for certain qualifying events and up to 36 months for other qualifying events or a second qualifying event during the initial period of coverage. Employers may choose to provide coverage for longer periods if they wish.
 
How much will I pay? You'll pay the entire premium amount, including the portion of the premium that your employer used to contribute toward your health benefits. You may also be required to pay a 2 percent administrative fee.
 
Do employers have to offer COBRA? Generally speaking, group health plans maintained by private-sector employers with 20 or more workers are subject to COBRA rules. However, if a company closed or went bankrupt and no longer offers a health plan, there is no required COBRA provision.
 
What's the process? Employers and qualified beneficiaries must inform the health plan administrator that a qualifying event has occurred. An employer has 30 days to give that notice in the event of an employee's death, termination, reduced hours of employment or entitlement to Medicare. A qualified beneficiary has 60 days to give notice after a divorce or legal separation or when a child no longer is covered as a dependent. A notice of the qualifying event must be sent to plan participants and beneficiaries within 14 days after the plan administrator receives notice that a qualifying event has occurred. An individual has 60 days to decide whether to elect coverage. After electing coverage, the person has 45 days to pay the premium.
 
What are the advantages of taking COBRA? Qualified individuals are able to buy temporary health insurance coverage at the group health rate. You will, however, pay more than active employees whose coverage is subsidized by the employer.
 
SOURCE: U.S. Department of Labor, Washington, D.C. October 24, 2005.