As a result of the coronavirus crisis, Americans are losing their jobs in record numbers. And, when jobs are lost, benefits also end.
Millions of people are now facing uncertainty not only around their employment but also about how to continue their healthcare coverage. Especially in the face of a public health emergency when their job is gone and their income is lost or significantly reduced.
COBRA is an option, but it’s expensive. Even when their former employer foots part or all of the bill with a subsidy, at some point the subsidy will end and that person will be faced with potential loss of coverage.
When an employee initially loses coverage, there are a number of options in addition to COBRA. For example, if a spouse, domestic partner or parent has coverage under their employer’s plan, they could be enrolled—if they meet the eligibility requirements—as a dependent under that employer’s plan. That’s because a dependent’s loss of other coverage is a qualified life event.
However, not all employer plans offer a subsidy for dependent coverage, so this can be an expensive proposition. It can also have the unwanted effect of significantly increasing the deductible and out-of-pocket maximum when the coverage tier changes, further driving up monthly contribution costs and the outlay for services before the plan kicks in, which can be financially devastating for families that just lost one income.
With enrollment in a family member’s plan, the only option is the current plan—either the one the employee was enrolled in before they lost eligibility or the one the family member is currently enrolled in. However, the healthcare plan that made financial sense at last year’s Annual Enrollment might not be the most economically appropriate one in the current circumstances.
(This is also generally true when electing COBRA coverage, although some employers have been considering allowing COBRA participants to choose another plan on enrollment.)
Employees losing their benefits eligibility need a more flexible and affordable way to continue their healthcare coverage with the ability to find a plan that meets their current needs. However, they may not be aware of all the options that exist, or how to navigate the healthcare plan landscape.
Businessolver offers a program that connects people who need coverage with insurance that fits their needs through the MyChoice™ Market.
The MyChoice Market has been used by employers looking to offer benefits access to part-time, gig and contract workers, but it also has several distinct advantages for employees who are laid off as a result of COVID-19.
- It offers choices. When an employee loses coverage, they have an enrollment opportunity on the private exchange that allows them to choose from a number of available healthcare plan options. They are not pigeon-holed into continuing coverage under the plan they had before they lost eligibility.
And, this choice-making extends to eligible family members. Unlike with traditional group coverage, a user in the MyChoice Market can choose a different plan for different people. This helps them tailor their plan choices so they can individually right-size plans in terms of cost and coverage.
- It’s typically less expensive than COBRA. Unlike group healthcare coverage that is experience- or community-rated, plans on the exchange are individually rated. So, those who are younger and who live in more favorable geographic areas benefit from lower premium rates. Even without this, former employees avoid the additional 2% COBRA fee.
- Coverage options extend beyond healthcare. In addition to core healthcare options including medical, dental and vision, MyChoice Market offers access to supplemental coverage like disability, hospital indemnity, critical illness and ID theft protection, among others. As people lose their jobs and their employer-sponsored coverage, using the exchange enables them to create a suite of protection that makes sense for them right now.
- It’s not just for those who had coverage. Many of the employees who are being laid off are in industries that relied on part-time workers who may not have had employer-sponsored healthcare coverage. Whether or not the person had healthcare coverage, their former employer can offer access to MyChoice™ Market to provide options for accessing post-employment benefits.
- It comes with help. Part of the MyChoice™ Market solution is licensed insurance experts who can guide users to the right benefits decisions—even if those decisions are for coverage outside the exchange. Our insurance reps can review all options—from COBRA to ACA plans on the public marketplace—and help users make their choices. They can even help people understand if they are eligible for a tax credit for a public marketplace plan.
A private exchange like MyChoice Market also makes sense for the employer for a number or reasons.
- It works with an employer subsidy. MyChoice Market can be paired with a post-employment HRA. Since premiums on the exchange are typically less expensive than COBRA, those employer dollars can go further and, as a result, be more valuable for the former employee.
- It provides a softer landing for those who didn’t have coverage before. As part of the offboarding process, employers can offer all severed employees access to the exchange, not just those who are losing coverage. When the economy begins to recover from the impacts of COVID-19, employers may be looking to rehire laid-off workers. Offering access to coverage can help engender loyalty that could make rehiring them easier.
- It’s a lower-risk, lower-cost option. When former employees are on COBRA, their claims experience impacts the employer—whether it drives up premiums or self-funded costs. When people have post-employment coverage through a private exchange it removes the cost risk to the employer.
As employers are forced to lay off workers due to the impacts of COVID-19, there are options beyond COBRA for former employees’ post-employment healthcare coverage. Connecting people to products and plans that are affordable and accessible can help them retain the healthcare coverage that is so vital given our current situation.
Want more insights to help you navigate HR and benefits challenges in the time of COVID-19? Find additional resources below.