"Purchasing coverage through ACA could save individuals with COBRA coverage thousands of dollars each year. "
A recent decision by the Department of Health and Human Services could prove to be a big benefit for some businesses. Even though the Affordable Care Act's first open-enrollment period ended in April 2014, some laid-off workers now still have the opportunity to secure ACA coverage.
In a May 2014 announcement, HHS extended the enrollment period for people who are currently receiving health coverage through COBRA - the Consolidated Omnibus Budget Reconciliation Act. HHS extended the ACA enrollment period to July 1 because it determined notifications about COBRA options were unclear to those enrolled in the program.
Purchasing coverage through ACA 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. But then they are responsible to pay the full cost of that coverage, including the company share, plus a 2 percent administrative fee.
Enrolling in ACA exchanges gives individuals and families the opportunity to purchase coverage that, depending on their income, may be subsidized by hundreds of dollars per month and therefore be more affordable for them in the face of having their hours reduced or being laid off.
"Employers can reduce their COBRA exposure with a strategic communications effort."
But businesses benefit, too. Here's how:
Potential Insurance Savings. Having participants in COBRA generally has a negative effect on employers on medical-insurance renewals and their overall ability to get competitive rates in the marketplace because former employers who stay on COBRA are generally those who could not get coverage due to a pre-existing health condition. Many of those former employees feared a change in their coverage due to ACA 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 enrolling in the ACA exchanges, and in the process, remove these higher claims from their insurance risk pool.
Compliance. Employers face some of the highest compliance requirements of all benefits with their COBRA participants. Reducing the number of former employees dependent on the company to provide timely and accurate COBRA benefits updates can reduce the workload on the company and increase efficiency.
Employers can reduce their COBRA exposure with a strategic communications effort. By educating their COBRA participants on the extension and explaining how ACA exchanges can potentially save them money, you and your former employees both win.
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Source: Bryson, Trent. "The Quiet Obamacare Change That Could Save Businesses Thousands" | Entrepreneur.com
http://www.entrepreneur.com/article/234432 June 3, 2014
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