COBRA stands for Consolidated Omnibus Budget Reconciliation Act, which is a federal law that allows workers and their families to temporarily maintain their employer-provided health insurance during certain situations such as job loss or a change in eligibility. COBRA requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain specific events. These events include termination or a reduction of a covered employees hours, divorce or legal separation from a covered employee, death of a covered employee, Medicare eligibility for a covered employee, and loss of a childs or dependents health insurance coverage under the plan.

COBRA generally applies to all group health plans maintained by private-sector employers with at least 20 employees. Qualified beneficiaries under COBRA include an employee, spouse, former spouses, and dependent children. To be eligible for COBRA, three basic requirements must be met: the group health plan must be covered by COBRA, a qualifying event must occur, and the individual must be a qualified beneficiary for that event.

COBRA continuation coverage lasts only for a limited period of time, and it is usually at the individuals own expense. However, COBRA Continuation Coverage provides eligible individuals with a 65 percent reduction of their COBRA premiums. If an individual needs health coverage in the time between losing job-based coverage and beginning coverage through the Marketplace, they may wish to elect COBRA coverage from their former employers plan.