How does it feel when you look a departing employee in the eyes and tell them their COBRA coverage will cost three or four times what they’re paying now? For HR professionals, that’s not the only time when news about individual coverage options is hard to deliver. Other examples:
- An adult child turns 26 and can no longer be covered on the parent’s plan
- A new employee has a coverage waiting period
- An employee misses open enrollment
- An employee’s spouse loses coverage due to divorce
- An employee has a baby and faces the higher cost of family coverage
- An employee or their spouse will soon turn 65 and is wondering about Medicare options
Fear not; you aren’t alone, and you can find better ways to help employees make affordable choices. Many brokers offer one-on-one services to help employees find individual coverage.
Options for departing employees and dependents
Most employers are set up to offer COBRA as the only alternative to employees and dependents losing group plan coverage. But COBRA costs are typically high and especially burdensome to an employee or dependent who doesn’t have the option of another group plan.
As an alternative to COBRA, many carriers are now offering one-year, short-term plans that operate much like a group plan – with copays for certain services and reasonable deductibles. These plans can cost up to 60% less than COBRA coverage for healthy employees. For those with pre-existing conditions, a marketplace plan also may be an option. Regulations on short-term plans are easing, and we expect to see even more options for 2021.
Truly short-term plans – covering 30, 60 or 90 days – may also be an option for employees who are in between jobs for a few months or entering a waiting period.
Another situation that may call for individual coverage is adding a newborn. This may result in a significant increase in premiums, as an employee moves from individual to family coverage rates. To save money, some decide to purchase a separate, private plan for the child. Coverage for healthy newborns is often quite affordable.
To help employees explore their options, ask your broker if they offer a service to guide them.
Alternatives for employees at age 65
Many employees turning 65 (and their spouses) forego Medicare in favor of their employer plan, which they perceive to be better or less expensive. In reality, both the employee and the employer are likely to pay less when the employee chooses a Medicare Advantage or supplement plan instead.
Most employees will get better coverage and pay less under Medicare. With low or no deductibles, no out-of-pocket maximums and no networks, the employee can get less-restricted coverage with a Medicare supplement plan. And they could save even more with an Advantage plan. This is another time when your broker may be able to help by walking Medicare-eligible employees through their options so they can make informed choices.
Most HR professionals have many titles. “Individual Coverage Expert” doesn’t have to be one of them. Speak with your broker about services they offer for individual coverage.
By April Greig, Individual Health Specialist