With all of the constant incoming news on the accessibility of the insurance exchanges, many questions have surfaced. Will they (or won’t they) be ready? What will the costs be? What will the plans look like?
It has stirred some debate among HR professionals as to whether this will serve to end their ‘COBRA’ responsibilities (administratively), as well as to sever COBRA participants from a liability perspective, when those former employees with chronic conditions stick to the policy through COBRA and have the potential to affect a group’s ‘health’ over the next few renewal periods.
The answer, is in fact, no. It will not do away with COBRA as it stands today. At least not overnight.
First, we must consider that costs in the exchange will be based upon a person’s demographics (age, gender, zip code, tobacco use, etc.) and that can have an effect on their rates.
Will the exchange (Marketplace) rates be lower than the COBRA premiums? Sometimes yes, and sometimes no. It will vary on a case-by-case basis. Consider if the former employer has been able to manage claims costs through an aggressive wellness program, coupled with a consumer driven strategic approach. They have then held costs in check over a considerable period of time and therefore have a lower rate than the exchanges can provide.
Moreover, and at times more simply evaluated, if the COBRA-eligible employees and dependents have met their deductible and/or maximum out of pocket costs, and they are receiving the highest level of benefits through the plan year, in turn, they may not want to switch to the exchange.
COBRA Remains – For Now
The recent BenefitsPro.com article “PPACA hasn’t killed COBRA – yet” states that “employers with a qualified health plan still will be required to provide the opportunity for a person to elect COBRA coverage. Its rules will remain in force.”
While the exchanges will now afford an option for former employees whose only choice was COBRA continuance, it will not guarantee and end to its offering as we see it today. It will come down to a case-by-case evaluation of cost and benefits versus their former employer’s COBRA plan.
Contact me to further discuss this topic.
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