The Consolidated Omnibus Budget Reconciliation Act (COBRA) provided workers who left jobs with an option to continue in their group health plans. While expensive, these plans usually offered excellent, comprehensive coverage that enabled people to continue with treatments even after they stopped working. While there are requirements that workers need to meet to be eligible for COBRA, employers must ensure that they have provided employees with the right type of plan.
The Affordable Care Act
When the Affordable Care Act (ACA) came into effect, COBRA itself wasn’t really affected, although the plans offered by employers had to meet ACA standards, and for a short time, workers were eligible for subsidies to help pay the cost. However, with the potential repeal of the ACA and no replacement in sight, it’s unsure what will happen with individual plans that have moved to COBRA status. If a worker were to leave a job in 2017 when plans still met ACA standards, technically, the COBRA version should have the same requirements even if the ACA were to be fully repealed. It is unclear, though, whether that’s what will actually happen. It is possible that plans could try to switch back to the more restrictive plans (with lifetime benefit caps, for example) seen pre-ACA. Again, though, it’s unclear what health insurance companies will try to do.
Right now, employers who have 50 or more workers who are full-time must offer health insurance. Employers who have 20 or more employees who have health coverage through the company are required to provide continuation coverage, so all of those plans are eligible for COBRA provided the employee meets the requirements for COBRA, such as being at the job for a minimum amount of time before leaving.
With the potential end of the ACA, if no replacement is offered or if the replacement does away with the employer mandate, then fewer people may be eligible to participate in COBRA because fewer would have had insurance at work.
When an employee leaves the company or reduces his or her hours below the required minimum to qualify for health insurance coverage, the employer is responsible for notifying the health insurance company (and dental and vision insurance companies, if applicable) about the change in status and for notifying the employee of his or her right to COBRA coverage. These plans have administrators, who could be people outside the company but are often people at the company (such as a Human Resources professional). It’s the administrator’s job to take care of the notifications and work with the employee to set up the COBRA enrollment.
Continuing coverage through COBRA has helped many families during and after a transition. No matter what happens with the ACA, employers should continue to offer what insurance they can, allowing employees to switch to COBRA when appropriate.