Employers sometimes include employer-paid COBRA for several months as a part of the severance payment to terminating employees. At the recent CAI Ask the Expert program, Joanne Forbes, with Hill, Chesson & Woody, cautioned members to review that practice in view of the Affordable Care Act and Marketplace options. Terminating employees who are offered a few months of paid COBRA are locked into COBRA. If they voluntarily drop when they become responsible for premiums, they cannot then opt to go to the Exchange because their reason for losing coverage is not a qualifying event. They would have to wait until the next open enrollment period.
Joanne recommends offering employees the option of a certain number of months of COBRA coverage or money to purchase coverage through the Exchange. That leaves the choice up to the employee. For some employees, COBRA may be cheaper than the Exchange when they have to assume the payment. For others the Exchange may be cheaper. In evaluating the best decision, employees may need your assistance in understanding whether they will be eligible for premium tax credits or subsidies for coverage purchased through the Exchange, and compare that to the cost of COBRA.
This is one of many great recommendations in the Ask the Expert session, How to Communicate Upcoming Healthcare Reform Changes to Your Employees. If you missed this presentation, you may still view the recorded webinar in myCAI by clicking on the Find CAI Resources tab and then on the Webinars page link.