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People who have been laid off or laid off from their jobs now have a lot more time to decide whether or not to keep their employer-sponsored health insurance, according to a recent federal rule.
Under the federal COBRA law, people who lose their professional cover due to a layoff or a reduction in their hours generally have 60 days to decide whether or not to continue their health insurance. But under the new rule, that clock does not start ticking until the end of the COVID-19 “epidemic period”, which began on March 1 and continues for 60 days after the end of the national COVID-19 emergency. This end date has not yet been determined.
By extending the time to register for COBRA coverage, people have at least 120 days to decide if they want to elect COBRA, and perhaps more depending on when they lost their jobs.
Take the example of a person who was laid off in April and imagine that the national emergency ends on August 31. Sixty days after this date, the person is taken until the end of October. Then the regular 60-day COBRA election period would start after that. So in this example, a person whose employer coverage ended in early May may have until the end of December to decide whether or not to subscribe to COBRA, with retroactive coverage to the start of May.
Some health policy experts question the usefulness of the change, given the high cost of COBRA coverage for consumers and the limited scope of it: it is not an option for uninsured people or self-employed or working for small businesses.
“For ideological reasons, this administration can do nothing to extend the safety net of the affordable care law,” said Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University. “So they use these other vehicles. But it is really a fig leaf. It doesn’t really help people. ”
What does this rule change mean for workers? If you’ve lost your job, here are some things to consider.
Play a game on hold
Under the new rule, workers can keep their COBRA options open much longer than before. It has always been the case that people could take a wait-and-see approach to signing up for COBRA within the first 60 days after losing coverage. If they needed care during this time, they could choose COBRA, refund premiums and continue their coverage. But if they didn’t need care during this period, they could save some of the money on premiums before opting for other coverage after the 60-day period.
Now people have even more time to wait and see. Under the rule, once the administration declared the national emergency over, laid-off workers would have 120 days to decide whether or not to take out professional insurance – 60 days under the new rule and the normal 60 days allowed in the framework of the COBRA law. .
“It becomes a long-term unpaid insurance policy,” said Jason Levitis, a non-resident fellow at the Center for Health Policy at the Brookings Institution. “There is no reason to register until something bad happens.”
It is not without risk, underline consumer advocates. Someone who has a serious medical emergency – a car accident or stroke – might not be able to process their COBRA documents until they need medical attention.
Waiting too long could also affect people’s ability to purchase other coverage. When people lose employment-based coverage, it triggers a special enrollment period that allows them to purchase new coverage in their public health insurance market for up to 60 days after.
“You might miss the opportunity to register for the [insurance] exchange ”created under the Affordable Care Act, said Katy Johnson, senior health policy counsel at the American Benefits Council, an employer advocacy group.
Don’t rely on the boss to help you
Employers are not required to inform people promptly of their COBRA eligibility. The same federal rule that gives workers more time to register with COBRA also pushes back notification requirements for employers.
“Once an employer fires you, they are not required to notify you that you are eligible for COBRA until the end of the emergency period,” said Karen Pollitz, senior fellow at KFF, Kaiser Family Foundation . (KHN is an independent editorial program of the foundation.)
For many employers, particularly large ones that contract out the administration of their benefits, notifications are routine and continue despite the federal change, said Alan Silver, senior director at Willis Towers Watson, benefits consultant. However, for small businesses with fewer than 200 workers, spreading information could be an issue, Silver said.
The costs can be breathtaking
Choosing COBRA is expensive because workers have to pay both their share of the premium and their employer, plus an administrative fee of 2%. A 48-year-old man paid $ 599 per month on average for individual COBRA coverage last year, according to a KFF analysis.
Additionally, if people choose COBRA several months after losing coverage, they could have to pay thousands of dollars in premiums back.
The advantage for former employees is that sticking to their old employer’s plan means they don’t have to start from scratch by paying off a new deductible on a new plan. They also don’t have to find new doctors, as often happens when people change health plans and provider networks change.
Ten percent of workers laid off or on leave due to the coronavirus pandemic said they have COBRA coverage, according to a survey conducted last spring by the Commonwealth Fund.
The COBRA extension is only available to people who worked in companies with 20 or more employees and had job-sponsored coverage prior to being laid off or laid off. If the business goes bankrupt, there is no health insurance to continue to subscribe.
Could hospitals intervene to pay the premiums?
Employers are generally not big fans of the program. Workers who choose COBRA are generally older and sicker than others covered by an employer, according to KFF’s analysis. They can have serious health issues that make them expensive to cover and increase costs for the employer.
Some political experts worry that giving people more time to sign up for COBRA leaves the door open for hospitals or other providers to offer to pay premiums for returning sick patients to increase their own. payment on top of what they would receive if someone was Medicaid or uninsured. This could be a boon for some patients, but increase health care costs for employers, said Christopher Condeluci, a health care lawyer who does legal and political work around the Affordable Care Act and ERISA questions.
“Employers are concerned,” said Pollitz. After being laid off, “what if you are not insured and you end up in the hospital six months later, then the hospital social worker learns that you are eligible for COBRA and offers to pay your premium? ”
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