In this political season there is a lot of talk about repealing and replacing Obamacare or maybe amending it. Whatever the results of the election are, we hope that health care regulators or Congress would consider some changes to COBRA that would simplify the requirements and make the program more effective for employees who are in-between jobs.

COBRA is a federal requirement for qualified beneficiaries to have the option to continue their employer –sponsored group medical benefits when that coverage is lost. We have far too many instances where COBRA inadvertently creates uninsured individuals with pre-existing conditions. But first things first:

The administration of COBRA is unnecessarily complex and expensive. There are complicated forms, mailings, timetables and record-keeping requirements. Employers, and indirectly employees, pay millions of dollars in fees to administer a program that does not meet the needs of most individuals who are losing coverage. This can be simplified. Employers should be required to give terminated employees a simple notice that they can call the provider’s toll free phone number to learn about their continuation options. The same notice can be distributed every year at open enrollment. The insurance company would also be required to send a notice to the employee’s home when they receive the notice from the employer that the employee’s coverage is being terminated. This notice should also be simple: call our toll free number to learn about your continuation options. Only those employees who are interested will call and receive the details of the coverage from the insurance company. The participants who enroll would be billed by the insurance company.

COBRA says that you can only continue the coverage you have. Some individuals can have 18 months of continued coverage; others can have 29 months or 36 months of coverage. This allows the health insurance company to cancel coverage for all COBRA participants, many will have pre-existing conditions. Why not require the insurance company to keep them as long as they pay their premium? After 18 months of coverage, they can be moved from the employer’s experience- rated group insurance plan to a separate individual plan maintained by the insurance company.

The cost of the coverage is always a big issue for COBRA participants. Many employers pay 50% or more of the cost of employee coverage. Under COBRA, the terminated employee must pay 102% of the cost for employee coverage. This cost can range from $300 to $600 per month or more. With dependent coverage the cost can easily reach $1,500 per month.

Why should a participant be limited to only the coverage provided by the employer? Maybe the employer could afford the “Cadillac” plan, but the terminated employee cannot. Why not give them a choice of something more affordable? Two additional options can be offered: a middle-of- the- road plan and a low- cost, high deductible plan. This plan would not cover maternity, substance abuse and other mandates that many individuals do not want. Yes, many will be horrified by this option. The truly poor will qualify for the generous benefits offered by Medicaid. The middle class can use one of these additional options as temporary coverage until they can land that new job with the “Cadillac” plan.

Anyone who takes the low cost plan should be protected from medical bankruptcy if a large claim should occur. Federal bankruptcy regulations should be changed to protect individuals from losing their homes if they have a large medical expense while insured under a high deductible plan. If the government is willing to loan students funds for college education, we should be able to loan low income individuals funds to cover their non-routine deductible expenses. Hospitals should also be required to provide their best discounts to individuals insured under these low cost plans.

This proposal is not designed to help insure the millions of currently uninsured. It will help individuals and families make an easy transition from a group insurance plan to individual coverage and back to a group insurance plan with their next employer.

Alan J. Hess
Employee Benefit Service Center
Albuquerque, New Mexico