In this climate of recession, COBRA (short for Consolidated Omnibus Budget Reconciliation Act) allows you to temporarily maintain health coverage, even if you lose your job.

Cobra isn't the right choice for everyone. You need to weigh the pros and cons of the program. There are also a host of requirements, such as: 

Employers must inform plan administrators within 30 days after an employee’s services are terminated or working hours are reduced. The administrator has to send a notice to the beneficiary within 14 days after receiving the information. The individual then has 60 days to decide whether to opt for COBRA. After deciding on Cobra, the individual has 45 days to pay the initial premium.

Pros of Cobra    

• You can keep your existing health plan with COBRA coverage. No changes are necessary with your doctors or pharmacies. You have the same benefits as the employees who are still with the company.   
• No additional paperwork involved, and the employer usually handles administrative matters.
• COBRA may be better for families with multiple ongoing medical needs, since medical expenses are likely to exceed the cost of COBRA, if the family was otherwise uninsured.
• Your spouse or any of your children can enroll in COBRA irrespective of your decision, if they were insured under your employer's group plan.
• COBRA allows you to continue with your employer’s group health coverage plan, and pre-existing conditions do not cause a problem. A pre-existing condition is a medical condition that existed before you obtained health insurance. If you find alternative individual coverage, that company may not provide coverage for pre-existing medical conditions for 9-12 months.
• Those who take up COBRA coverage if they or any of their family members lost their jobs between September 1, 2008 and December 31, 2009 may be eligible to pay a reduced premium under the American Recovery and Reinvestment Act of 2009. A federal subsidy will pay 65% of your COBRA premiums for nine months. More details can be found at the Department of Labor Web site .

Cons of Cobra

• The cost of COBRA coverage is often significantly higher than what the subscriber was previously paying. You can be charged 100 percent of the premium, which was earlier partly borne by the employer. You could also be charged an administrative fee up to 2 percent, which pushes up your premium burden to 102 percent.
• COBRA coverage is temporary and usually lasts for only 18 months. Eventually subscribers have to find other options for insurance. Under special circumstances, you can extend COBRA, but you will end up paying up to 150 percent of the premium.
• You are eligible for COBRA if your company had 20 or more employees on more than 50 percent of its typical business days in the previous calendar year, and the employees were enrolled in a group health plan. If you are with a small startup with less than 20 employees you cannot bank on COBRA. Many states have passed laws that expand the right to continue group health plans to those working in smaller companies, usually with two to 19 employees.
• A single individual in good health may be better off with cheaper short-term health insurance or even a more comprehensive individual health plan.
• You are at the mercy of the employer’s health coverage decisions. If the employer decides to drop the health plan, you immediately lose COBRA coverage. If the employer lessens coverage or increases costs, COBRA beneficiaries will be affected. If the employer switches to another health plan, COBRA subscribers have no option but to follow.