When Health Care Reform first passed, there were many that felt it was the beginning of the end for COBRA. In the years since, we have gained additional insights regarding the roles of COBRA and the Health Insurance Exchange (“The Exchange”).
What is COBRA? COBRA (or the Consolidated Omnibus Budget Reconciliation Act) is the continuation of benefit coverage when the group coverage would otherwise be lost due to certain qualifying events, such as job loss. Group health plans covered by COBRA include: health, dental, vision, prescription, chiropractic, employee assistance program (EAP), flexible spending accounts (FSAs), health reimbursement accounts (HRAs), and medical expense reimbursement plans (MERPs).
What role does the The Exchange play? When job-based health coverage is lost, an individual would qualify for a special enrollment period on The Exchange. In most cases, the individual will have the option of electing COBRA or enrolling in coverage through The Exchange.
Why would an individual enroll in COBRA instead of going to The Exchange?
- Same coverage: When an individual elects COBRA, they elect to continue the coverage they had on the last eligible date. For many individuals, there is comfort and familiarity with keeping the same plan.
- Premium rates: Individual’s will want to compare premiums offered through COBRA compared to those available through the Exchange. Since the COBRA premiums will be based on the group rate, there may be financial incentives to select the COBRA option. The Exchange will also look at your total household income to determine if you are eligible for any subsidies which may affect the affordability of plans offered on The Exchange.
- Loss of Benefits: COBRA covers group health plans including: health, dental, vision, prescription, chiropractic, EAP, FSA, HRA, and MERP. The Exchange primarily focuses on health or major medical coverage. In order to avoid a loss of these ancillary benefits, it may be beneficial to elect COBRA for these services.
- Networks / Access to certain doctor’s: In order to make premiums more affordable on The Exchange, many plans offer a narrow network of providers. An individual should consider what doctors or providers were available under their current plan vs. proposed plans on The Exchange. Electing COBRA coverage can ensure access to these desired doctors or providers.