Under Healthcare Reform is an employer still obligated to offer COBRA?

Under the new 2014 Healthcare reform, with the offering of the Exchange, is an employer still obligated to offer COBRA?  The answer is YES!  The Department of Labor did nothing to change the qualifying events for which COBRA is offered or eliminate an employers obligation to offer COBRA, or change the duration of the continuing coverage.

If an employer decides to drop a group plan the employee has the option to go to the exchange or take COBRA.  Why is this?  First of all since COBRA applies to all health coverage (medical, life, vision, dental, etc.), the individual may want to elect COBRA for the qualified benefit that may not be offered on the Exchange, for example dental or vision.

Secondly, each Qualified Beneficiary (QB) has the right to elect COBRA coverage.  The exchange plan that is available may not be better than the COBRA benefit and the QB has the option to continue their previous coverage.

During the Exchange plan’s open enrollment, QB’s that are enrolled in COBRA have an option in enrolling in an Exchange plan starting on January 1, 2014; however, they do not qualify for a subsidy until their COBRA period has expired.  Also if the QB’s plan is terminated because of non-payment, they can enroll in the Exchange plan but also will not get subsidy until the COBRA period expires.

Finally,  if an employer eliminates their group plan, the employees are eligible to enroll in the Exchange during a 60-day special Exchange plan open enrollment window.  If the QB waives the right to COBRA, they will then be eligible to receive a subsidy.  If the QB elects COBRA and then drops it either during the open enrollment window or once the window closes, they will not be eligible for the subsidy.

This may seem like a lot of information, and it is!  Do not try to do this on your own!  Contact Koehler, Koehler, Inc. for help with your benefits and your COBRA.  Having a broker’s service is free whether you are an employer, employee, or an individual.  We will help you make decisions that are Reform-compliant and right for your situation.