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COBRA refers to the Consolidated Omnibus Budget Reconciliation Act of 1985, more specifically, to a provision added to the budget reconciliation process that allows people to keep their employer-provided health insurance for generally 18 months (sometimes 36 months) after a qualifying event such as a layoff or divorce, providing they pay the full price plus a 2% administration fee. COBRA does not apply if the employer goes out of business or if the employer terminates the plan completely. Though COBRA benefits are often very expensive, many people who otherwise would be unable to purchase any health insurance have benefited from its existence when changing jobs or after a layoff or divorce.

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