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Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA, is a federal law providing continuation of group health coverage that would otherwise be lost due to life events such as termination of employment, death of an employee, and divorce. The original bill allows coverage continuation of full employer cost.

Due to economic difficulties and significant job loss across the nation the federal government passed a law which became in effect in February 2009. The American Recovery and Reinvestment Act of 2009 provided subsidy for eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs. This subsidy allows them to pay only 35 percent of the cost of COBRA coverage.

Last December congress passed and the president signed a defense spending bill that included a COBRA subsidy extension through the end of February 2010. This bill provides continues medical insurance coverage for involuntary terminated workers, at a same reduced premium.

A new bill is pending to further extend COBRA subsidy for those still without jobs. Votes expected early next week.
The 65 percent subsidy has been a big help for millions of laid-off employees and their families who, in many cases, would have been hard-pressed to pay the entire monthly premium, which typically is about $400 for individual coverage and $1,200 for family coverage.

Congressional researchers estimate that the new subsidy would benefit about 7 million former employees and their families and cost about $25 billion.