What is COBRA and why is it so expensive?
A — COBRA stands for Consolidated Omnibus Budget Reconciliation Act and was passed in 1986 to help families keep their group health insurance in the event of a qualified job loss. Basically, if you lose your job and your health insurance was tied to that job, and your former employer must comply with COBRA, this law says you must be allowed to remain on the health plan for up to 18 months. It’s so expensive in most cases because the terminated employee is usually required to pay up to 102% of the premiums whereas the boss was paying most of the health insurance premium prior to the job loss. Many workers have no idea how much their health insurance costs until they are offered coverage through COBRA, and this is a huge reason costs are so high in America for both insurance and medical care. No one spends someone else’s money as carefully as they spend their own.
