Is it possible that the Cadillac Tax will be a major health spending cost ‘deflator’?
Individuals are eligible to enroll in individual medical insurance outside of the annual Open Enrollment period if they experience a qualifying event. Loss of your company’s group medical insurance upon termination would be considered such a qualifying event and the former employee could enroll in individual coverage within 60 days. In some cases, the former employee may be eligible for subsidies through the exchange to reduce the cost of coverage.
As an example of the aforementioned ‘COBRA issue’, a terminated employee accepts the former employer’s offer to pay 1 month of COBRA premiums. Following that month, the former employee decides she will not continue COBRA because she cannot afford the cost of the full premium. She seeks individual medical insurance for a less expensive option but is told that, unless she had completed the full 18 months of COBRA, she cannot enroll in individual medical insurance outside of the annual Open Enrollment period.
Offering a severance package is a nice gesture but we will need to think twice about it under these new rules. There are temporary medical insurance plans and other circumstances that might allow our example former employee to enroll in individual medical insurance following COBRA severance but each situation will need to be evaluated.
LEARN MORE ABOUT THIS COORDINATION PROBLEM HERE
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