Affordable Care Act exchanges’ Impact on COBRA

This post is a transcript of Benefit News’ recently posted podcast  where “Mary Jo Davis, Ceridian’s VP of product management, discusses the Affordable Care Act’s impact on COBRA.”

Questions Posed about the Affordable Care Act exchanges’ Impact on COBRA

Q: Did the Affordable Care Act (ACA) incorporate COBRA?
A: No, the ACA is a separate law and COBRA, and older laws like it, haven’t changed in the face of health care reform. The Department of Labor, which regulates COBRA, indicates that the Patient Protection and Affordable Care Act (PPACA aka ACA) did not change COBRA in any way.

Q: How do you think ACA will effect COBRA?
A: There is a perception that health exchanges eliminate the need for COBRA since individuals will have access to health insurance in ways that they don’t today, especially since PPACA ensures that insureds can’t be denied coverage due to pre-existing conditions, but COBRA is in no way reduced due to PPACA. However, when the health exchanges come on line in 2014, that will provide additional options to individuals, including those that are eligible for COBRA.

Myths about Affordable Care Act Exchanges and COBRA

1. Health Exchanges will be consistent across every state: There is latitude for each state to design the exchanges.

2. Exchanges will have premiums that are less than Employer Sponsored Coverage: This will depend on how the risk pools end up. There is a possibility that the health exchange could be more expensive.

3. Exchanges will be available to all consumers: Actually, initially they will only be available to small employers, defined as groups of less than 100, and in some states less than 50.

4. Exchanges will lower the number of insureds through their employer:  Under the new mandate, individuals will be responsible for having health coverage. Some of those people are eligible for coverage with their employer, but until now have chosen not to take it.  This may mean that more individuals will choose to take it as required by health care reform.

Anticipated Changes to COBRA due to the Affordable Care Act

Q: Any changes coming to COBRA?
A: No significant changes in the near future. 2014 to 2017 may see an allowance for large employers to be eligible for coverage through the exchanges, but we don’t see any impacts to COBRA coming up. The cost of coverage will be one factor that could lessen the importance of COBRA.  There are other reasons why COBRA should remain in effect. Dental and vision coverage may not be offered through the exchange, or individuals may have met their deductibles and out of pocket limits through their employer sponsored insurance so it may be costly for them to switch to the exchange. Or if they have a particular provider or doctor network that they want to stay with, which may not be offered through the exchange. Lastly, applying for insurance through the exchange may be confusing. We’ve recently seen, through the Department of Labor, some changes to the model COBRA and election notices. Those changes explain the possible availability of consumers to get coverage through the exchanges.

Are you utilizing COBRA benefits?  Do you anticipate switching to an Exchange instead?

Please share your thoughts and experiences in the comments section below, or on our facebook page.

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