The Quiet Obamacare Change That Could Save Businesses Thousands
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The Affordable Care Act's first open-enrollment period ended in April 2014, but some laid-off workers still have the opportunity to secure Obamacare coverage via a recent decision by the Department of Health and Human Services. This extension could prove to be a big benefit for some businesses.
In an announcement issued in May 2014, Health and Human Services extended the enrollment period for people who have health coverage through COBRA—the Consolidated Omnibus Budget Reconciliation Act. The Department extended the Obamacare enrollment period to July 1 because it deemed notifications about COBRA options were unclear to those enrolled in the program.
Purchasing coverage through Obamacare could save individuals with COBRA coverage thousands of dollars each year. Under COBRA, individuals who have been laid off or had work hours reduced can maintain the medical insurance they had through their employer. However, they are responsible to pay the full cost of that coverage, including the company share, plus a 2 percent administrative fee.
By enrolling in Obamacare, individuals and families have the opportunity to purchase coverage that, depending on their income, could be subsidized by hundreds of dollars per month and therefore be more affordable for them.
But businesses benefit, too. Here's how:
Potential Insurance Savings. Employers who have participants in COBRA are generally negatively affected on medical-insurance renewals and overall ability to get competitive rates in the marketplace because former employees who stay on COBRA are generally those who could not get coverage due to a pre-existing health condition. In the chaos of Obamacare, many of those same people feared a change in their coverage could mean a loss of coverage, and so they remained on COBRA. This special enrollment extension allows employers to educate their former employees on the benefits of changing coverage, and in the process, remove these higher claims from their insurance risk pool.
Compliance. COBRA participants carry some of the highest compliance requirements of all benefits. Reducing the number of participants dependent on the company to provide timely and accurate benefits updates can reduce the workload on the company and increase efficiency.
Employers can reduce their COBRA exposure with a careful and well-executed outreach strategy. By educating COBRA participants on the extension and explaining how Obamacare can potentially save them money, employers can work to reduce their COBRA exposure. Business owners should consider working with a knowledgeable insurance broker skilled in communicating insurance details to employees. An insurance professional will know best how to communicate to former employees and will save business owners from potential miscommunication and misinformation.