Among the many repercussions from losing a full-time job-whether through being laid off, downsized, or retiring-is the loss of company insurance benefits. To address this issue, in 1986 Congress passed then-landmark legislation called the Consolidated Omnibus Budget Reconciliation Act, best known as COBRA. The law was designed to enable qualified workers to continue health insurance that would normally be terminated.

The upside of COBRA is that it guarantees certain former employees, retirees, spouses, and dependent children the right to keep their health coverage at group rates for a limited, specified amount of time. COBRA defines a group health plan as one that provides medical benefits for the employers' workers and their dependents through insurance or other means, including a trust, a health maintenance association, or a reimbursement policy.

In general, the legislation applies to group health plans maintained by employers-including state and municipal governments. COBRA does not apply, however, to insurance plans sponsored by the Federal government and by certain religious organizations.

According to the COBRA web site, "Group health plans sponsored by private sector employers generally are welfare benefit plans governed by the Employee Retirement Income Security Act (ERISA), and subject to its requirements for reporting and disclosure, fiduciary standards and enforcement."

What that means for the retired and unemployed is that ERISA does not mandate the level of benefits offered to plan participants. However, it does require that these plans have rules detailing how workers become entitled to benefits.

Typical benefits offered under COBRA rules include inpatient and outpatient hospital care; doctor's visits; surgeries; prescription drugs; and in some cases dental and eye exams.

COBRA insurance eligibility is based upon three key requirements: the type of health insurance plan, a qualifying event, and qualifying beneficiaries. First, your company must have covered 20 or more employees in the previous year. Next, your unemployment needs to be the result of retirement or getting laid off through no fault of your own. Employees fired for misconduct are not eligible. Lastly, in most cases, employees, their spouse, and any dependent children are eligible for COBRA insurance.

The downside of COBRA is that it only covers certain circumstances and it can be significantly more expensive than what the worker paid when in the company's employ. However, in most cases COBRA premiums will be less than if signing up for an individual health insurance plan.

The typical COBRA insurance plan lasts for 18 months from the date of retirement or termination and costs 102 percent of the premium. In order to apply for COBRA, a form provided by your employer must be filed within 14 days of when an employee is told they are being terminated or have decided that they are going to retire. According to the COBRA web site: "After that, you have 60 days to decide if you would like to elect COBRA insurance coverage, complete the election form, and pay the initial premium. The COBRA insurance coverage will be retroactive from the day you would have lost medical insurance coverage."

Some states have enacted their own COBRA-type laws for those who do not meet the three key elements, such as if your company insured less than 20 people. Commonly known as Mini COBRA insurance laws or COBRA Insurance Continuation Laws, these plans tend to cost more than the Federal COBRA plans, sometimes as high as 150 percent of the premium. For some people, it may be cheaper to find non-COBRA insurance in these cases.

In the end, COBRA is intended to be a health care bridge between jobs, to provide medical peace of mind while searching for new employment.

For more information, visit COBRAInsuranceBenefits.org.