Before the advent of federal legislation commonly referred to by its acronym -- COBRA (short for the Consolidated Omnibus Budget Reconciliation Act of 1985) --leaving one job typically meant losing the coverage altogether, whether the employee left for another job or they were terminated for reasons other than "gross misconduct."



Since passage of the Act, those same workers have had COBRA working for them, the key option being the ability to continue the employer's group health insurance plan for up to 18 months, though this can be quite costly, as the former employee typically has to pick up 100% of the cost.

The introduction of COBRA also came with its own set of cautions, since the window for signing up for a continuation of an employer's coverage is a very narrow one. It's also "one way," meaning that once a former employee says "no thanks" to the company's COBRA plan (or simply chooses to buy an individual plan), they can't go back later.

But those who are healthy, and whose family members are in the same category, are wise to look into individual health insurance plans instead, as the premium rates can be significantly less than the cost of a comparable COBRA group health insurance policy.

How much less? In some cases, half the cost. The reason for the cost gap has to do with who actually pays the cost of the group health coverage. For most companies, the employer foots a significant portion of the cost for active employees.

What about an employee whose company is not subject to COBRA? Some states have adopted their own version of the idea behind COBRA; in some cases, those plans are even more flexible in determining who is eligible for continuing health insurance coverage. Under COBRA, changes to an employer's health plan mean the former employee will receive the new benefits. Additionally, a change by the employer to an entirely new plan will mean the former employee will take on the change as well.

Another "all or nothing" aspect of COBRA has to do with an employer plan that has one plan with multiple health insurance benefits. If that's the case, the former employee can't "unbundle" the coverage, the exception being a plan that allows that for all who are in the plan.

While eligibility may be one consideration for those looking at COBRA, it isn't the only one. Those who have no pre-existing conditions and feel that COBRA is too expensive will want to consider buying individual insurance during the time between jobs, to cover a waiting period in a new job, or even to opt-out of coverage in a new job if the cost and benefits are more desirable with an individual plan.

There are several forms of health insurance coverage that are subject to COBRA regulations, including medical plans, dental, vision, and prescription drug plans, drug and alcohol treatment programs, Employee Assistance Plans (known as EAPs, providing services such as counseling or psychological treatment), on-site health care (including discount or free medical services) and, under certain circumstances, section 125 spending arrangements, also known as cafeteria plans.

Benefits not subject to COBRA include wellness programs, life, disability, and long term care insurance plans, and medical savings accounts as well as EAPs that do not provide medical care.