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Health Insurance & Affordable Care Act

Leaving Your Job? Exchanges Have Insurance Choices

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"Particularly in the beginning, it could be common that people don't understand all their options," says Laurel Lucia, a policy analyst at the Center for Labor Research and Education at the University of California, Berkeley.

Lucia says she and her colleagues are concerned that the notice that workers receive informing them of their right to elect COBRA coverage may not make it clear that enrolling in that coverage will likely limit when they can enroll in plans on the exchange.

Signing up for COBRA instead of an exchange plan could have serious financial repercussions. An analysis of premiums for plans on 12 state marketplaces by Avalere Health found that a mid-level individual plan would cost $336, on average. About 80 percent of exchange enrollees will qualify for subsidies that will reduce their costs.

Meanwhile, the average monthly cost for single coverage in an employer-sponsored plan is $490, according to the Kaiser Family Foundation’s 2013 employer health benefits survey. (KHN is an editorially independent program of the foundation.) But the employee pays just $83 of that amount, because the employer covers 83 percent of the total, on average. Once people sign up for COBRA, however, they're typically responsible for the whole premium.

Despite its generally higher cost, COBRA may appeal to some people, say experts, including those who want to maintain access to a particular network of providers. And even though the COBRA premium may be higher, if you've already satisfied the deductible on your employer plan for the year, "you might not want to flip over to a new policy where you're going to have a new deductible," says Amy Bergner, a managing director at PwC Human Resource Services.

Some outstanding questions about COBRA and eligibility for exchange coverage remain. The Treasury Department and the Internal Revenue Service have proposed that workers who become eligible for COBRA because their hours are reduced be treated differently than those who leave their jobs. "COBRA eligibility for someone who is still working will be treated like any other offer of employer coverage," according to the IRS. "If it's affordable, then the employee will be barred from the premium tax credit, whether or not he enrolls." That regulation has not yet been finalized.

Mon, Dec 19 2011

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