Posted by: brucestein | February 6, 2009

Proposed Expansion of COBRA

Our nation is going through some tough economic times.  A part of the new stimulus package being debated in Washington includes an expansion of COBRA coverage.  With the recent announcement of massive layoffs, it’s easy to see the dramatic effects this legislation could have on workers and employers alike.

Under current law, COBRA provides for continued health coverage through a previous employer’s  health plan; said coverage may extend for up to 18 months for most people, but they must pay 102 percent of the cost of that coverage.

Specifically, the House version of the bill contains three COBRA components:

  1. A temporary subsidy for COBRA premiums to enable people who have been involuntarily terminated from their jobs to maintain coverage they had through work,
  2. New options for states to extend healthcare to unemployed workers through Medicaid, and
  3. An extension of COBRA eligibility (without subsidies) for long-term employees and older workers.

Besides affecting workers, if these new provisions become law our country’s businesses will face additional and unavoidable challenges, simply because COBRA administration is laborious and exacting in the first place, without the added components mentioned above.

TASC is ready to help.  We are well prepared to address the first component, as we have the infrastructure and the experience already in place to help employers collect the government subsidies (which will in turn help pay the COBRA premiums). After all, this added step is not far from our current COBRA administration services in which we collect these funds from employees who have elected COBRA coverage.

The second component offers TASC an opportunity to move into the institutional services area.

The last component is interesting as well.  Under this provision, COBRA-eligible workers who are age 55 or older, or who have worked for an employer for 10 or more years, would be able to retain COBRA coverage, at their own expense, until they become Medicare eligible at age 65 or secure coverage through a subsequent employer.  This sounds very much like a new product that TASC is already developing (hopefully for release later this year).  Through a recent acquisition in Rhode Island, TASC has obtained a Retiree Billing product that would serve us well in helping employers deal with long-term COBRA coverage.

TASC will continue to monitor the progress of this bill, and others like it.  We’re always looking for opportunities to bring more value to our customers.


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