Affordable Care Act & COBRA Considerations

The Affordable Care Act (ACA) made a number of changes to health plans and alternative options for health coverage, but did not change or eliminate COBRA continuation rules. However, COBRA has been impacted by ACA changes in ways not previously considered.

Exchange/Marketplace Interaction: Enrollment in the Exchange/Marketplace can take place during its annual Open Enrollment period or during a special 60 day enrollment period that is allowed when certain triggering events occur (i.e. termination of employment). When a COBRA Qualifying Event occurs, Qualified Beneficiaries (QB’s) will have the option of enrolling in COBRA coverage or a health plan through the Exchange. If COBRA is elected, QB’s can only enroll in the Exchange during the annual Open Enrollment period or once the entire maximum COBRA coverage period is exhausted. Careful consideration of options should be considered by a QB at the time of a Qualifying Event and before electing a plan.

Severance Agreements: It is not uncommon for employers to subsidize COBRA premiums in a severance agreement if the employee elects COBRA coverage. However, the interaction between COBRA and the Exchange may change the way we think about this practice. If an employee elects COBRA coverage to gain the employer subsidy, they may not be able to enroll in the Exchange at the time that the employer subsidy ends. While the new model COBRA election notices include detailed information about the Exchange options, employers may want to provide information to employees regarding the interaction between COBRA and the Exchange at the time that a severance agreement with COBRA subsidy is offered.

An employer’s COBRA responsibility certainly has not ceased with the availability of the Exchange. In fact, the addition of the Exchange has added a level of complexity for employers and QB’s.

Posted on August 08, 2014 by Jennifer Alfieri, Operations Manager


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