The Future of COBRA Under the Affordable Care Act

Nov. 12, 2012 - PRLog -- The Affordable Care Act (“ACA” or “Obamacare”) requires a “health insurance exchange” to be established in each state to allow individuals to obtain health insurance. It also requires employers with over fifty employees to offer health coverage to their employees or pay a large fine per employee to the Federal government.

Starting in 2014, individuals will be able to meet the new requirement to have health insurance by purchasing health coverage through a state-sponsored exchange (using after-tax dollars). Additionally, there is a new mandate for employers who employ more than 100 employees to offer employer-sponsored health coverage.

It is important to realize that the COBRA law remains a requirement under the Affordable Care Act and COBRA is actually referenced and relied upon within several provisions of Obamacare, such as the requirement to provide the health benefit costs on an individual’s W-2. Whether the state exchanges move forward with the current timeline or are permitted to be postponed through revised regulations or the increased issuance of state-exchange waivers, COBRA will continue to be law and compliance will continue to be required as an alternative choice for a qualified beneficiary.

Since 1986, Travis Software has provided software solutions to assist with COBRA administration and will continue to do so as the ACA unfolds because:

1.  The new employer mandate is going to cause potentially thousands of new employers to offer group health coverage.

2.  Compliance with the COBRA law remains a required element of employer-sponsored coverage, therefore even more employers will need to comply with COBRA.

3.  The bulk of the administrative requirement burden of COBRA occurs during the notification and enrollment period, prior to the qualified beneficiary’s payment of premiums, and nothing about those requirements has been changed. In fact, the U.S. Department of Labor has confirmed that COBRA coverage must continue to be provided under the ACA. This means that even if COBRA participation begins to decline if individuals choose to take the state-exchange coverage rather than the COBRA coverage offered them, most of the administrative work of COBRA will remain to be done.

4.   The current COBRA enrollment rate is about 12% and Travis believes that participation levels may not experience much fluctuation. This understanding is because the individuals who routinely take advantage of COBRA are those who fear that losing coverage, even for a short period, would result in significant and likely unaffordable health expenses. COBRA enrollees are usually those that are more actively in the health system.

Such individuals are very well informed about specific coverage and the cost associated with such coverage and will likely be leery of enrolling in a new health plan without first knowing the details. When purchasing coverage through an exchange, the specifics of what is and is not covered will almost certainly not be the same as the coverage they received under the employer-sponsored plan as a COBRA enrollee. On top of that, exchange premiums are likely to be higher if the same coverage as found in a group health plan is available.

The ACA, if and when implemented, may provide a great opportunity for its TPA customers to increase the number of employers for whom they provide COBRA services. Also, those organizations who may be thinking of beginning to offer COBRA services may be encouraged to do so because of the new employer clients they may obtain due to the ACA’s requirement for group health insurance to be offered.

Many more employers will need to provide health coverage under the ACA, and if the state exchange coverage is either inadequate or very expensive, traditional group health coverage will continue to be the most cost-effective option for a COBRA qualified beneficiary. COBRA is continuing to be a part of the traditional group health insurance picture, and it may become even more important than it is now when the ACA is fully implemented.

Find out why Travis Software's fully-automated WebCOBRA system is the most widely used COBRA administration software solution in the industry. (http://www.travisoft.com/webcobra/index.php)