Does COBRA insurance still exist under ObamaCare?
Obamacare did not change COBRA, but it did reform the health insurance industry in the same policy areas as COBRA. Both laws sought to protect insurance rights for employees that lost coverage from an employer-sponsored plan. Obamacare changed the health insurance marketplace to add lower cost insurance options, and it incorporated essential health benefits to every qualified plan. Compare health insurance rates now by using our FREE tool above!
The Individual Mandate
COBRA qualifies as insurance under Obamacare and if one accepts COBRA then one has coverage under Obamacare. This is also important for those who wish to switch. COBRA coverage means one has insurance and does not qualify for special enrollment. Those with COBRA can only switch during open enrollment.
Basic Terms of COBRA
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires that employees be given the option to continue their group coverage for up to 18 months, or 36 months in some situations. COBRA provides for the continuation of health insurance coverage for those who lose employer-sponsored group health plans. The job loss can come from resignation, RIF, loss of eligibility by loss of work hours, and involuntary job loss except for gross misconduct.
The employee can keep the same coverage, providers, and network resources.
Like Obamacare, COBRA does not require medical underwriting so that pre-existing conditions do not bar coverage. COBRA, the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, was a step towards untying employment and health insurance by providing a method of insurance portability for employees.
The Advantages of COBRA Coverage
COBRA had particular value because it guaranteed the continuation of health coverage; health plan coverage transferred under COBRA would not require dealing with additional premium charges, denials for pre-existing conditions, and negotiating new terms of coverage. It was a way of keeping a certain comfort zone with health coverage despite the most fundamental change in employment. In the pre-Obamacare insurance market, some benefits were rare, and others were quite expensive. Among the rare and expensive benefits were maternity coverage.
Many insurers treated pregnancy as a pre-existing condition, and gender biased rules added thousands of dollars to female health insurance contracts. When enacted, COBRA was a landmark law; it freed employees from job lock and gave them a viable option to keep comprehensive coverage. COBRA coverage was also valuable because it usually included maternity benefits.
Life Events Exception
Open enrollment is the designated period in which every qualified person can buy health insurance. After open enrollment, one must qualify for an exception. The end of COBRA coverage is a loss of insurance that qualifies as a life event. The end of COBRA coverage qualifies the employee for a special enrollment period.
The Disadvantages of COBRA Coverage
The most compelling argument against COBRA is that it only continues an existing plan with no options for change. One simply gets to keep the same group plan as provided by the Employer. COBRA required an additional two percent administrative fee, and the employee paid the entire premium. COBRA kept insurance, but it locks the subscriber into the job-related plan. Further, COBRA keeps the employee connected to the job long after the job has ended. In pre-Affordable Care Act market, COBRA plans were nearly always more extensive and generous than private plans.
- No choice of plan, and the employee can only keep the current plan
- No subsidy employee pays all including former Employer share
- Not available if group disbands or the employer closed its program
- Many Employers were exempt from COBRA
Job Lock Issues
Resolving the job lock issue was one of the policy goals of the Affordable Care Act. People with employer-sponsored plans were sometimes trapped in a circumstance wherein new coverage might be difficult, more expensive, or deniable. Pre-ACA, pre-existing conditions, and pregnancy were typical reasons for additional charges or denial of coverage.
Obamacare addressed job lock in a comprehensive way because it gave a wide choice of plans to those who need them and an opportunity to buy insurance.
Loss of coverage is a life event that qualifies an applicant for a special enrollment period outside of open enrollment. For those earning less than 400 percent of the federal poverty guideline, Obamacare has subsidies and costs assistance. Obamacare policies frequently provide greater coverage than COBRA group plans for less money.
Why Keep COBRA?
When COBRA was enacted, Obamacare did not exist and for more than 30 years, COBRA was the best protection for employees in employer-sponsored health plans. With the enactment of the Affordable Care Act, employees need not be as concerned about losing employer plans or changing jobs; they can buy insurance without fear of denial for health conditions. The best argument for keeping COBRA over Obamacare is to keep the same doctors and provider network. Although many employees did not choose the employer-sponsored plan, they may be accustomed to its terms and protections. Keeping the same plan and doctor have more than an emotional or comfort appeal; this could be important to someone in a given situation such as in the midst of treatment for a severe condition like cancer.
The best argument for keeping COBRA over Obamacare is to keep the same doctors and provider network.
Although many employees did not choose the employer-sponsored plan, they may be accustomed to its terms and protections. Keeping the same plan and doctor have more than an emotional or comfort appeal; this could be important to someone in a given situation such as in the midst of treatment for a severe condition like cancer.
Obamacare and COBRA Together
Comparison shopping is an excellent method for individuals trying to decide between Obamacare and COBRA coverage. COBRA is still a viable option for those losing coverage from an employer-based plan. It offers a possibly vital way to stay connected to a network and medical service providers when that choice is important. While in theory, the ACA offers a wide variety of choices and possibly far lower prices for premiums and costs, many persons could choose COBRA for reasons of particular relevance to them or their situations.
Further, persons earning more than 400 percent of the poverty line would not gain financial benefits from Obamacare but would enjoy the range of options for the four types of plans offered in the federal or state marketplaces. For those who can adjust income to get Obamacare benefits, they can enjoy savings, lower costs, and expanded options for coverage. Comparison shopping would provide revealing information and inform a choice between a metal plan and COBRA benefits. Enter your zip code in our FREE tool below to compare health insurance rates instantly!