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With the sharp increase in layoffs nationwide, many benefits departments are swamped with COBRA paperwork. At Workforce Solutions, Inc. we process all the necessary COBRA paperwork for our clients, just another benefit of working with us. However, many clients are confused about how the new Stimulus Package, that President Obama signed into law yesterday will impact their company when it comes to offering COBRA to terminated employees.

At least there’s a little good news about COBRA and the stimulus package. Many companies are relieved by the scaled-down COBRA subsidy that accompanied the economic stimulus package passed by Congress. Under the original House version of the bill, there was provision to allow eligible workers to maintain COBRA coverage – at their own expense – until they became Medicare eligible (age 65) or received coverage from another employer.

The rule would’ve applied both to former employees age 55 and older and to workers who worked for the same employer for 10 or more years.

The final bill that President Obama signed into law doesn’t change the COBRA coverage time limit.  If the other bill had passed, it would’ve created a lot of extra burden on employers.  Even though workers take on the direct cost of COBRA coverage, employers are left to deal with legal compliance headaches, increased utilization of their health plan resulting in increased premium costs as well as administrative time.

Temporary insurance can be a money-saving alternative to COBRA for  employees or dependents no longer eligible for your health plan.

For employers, it’s a no muss, no fuss way to reduce your COBRA rolls and paperwork and also save cost increases during Health Insurance renewals. The COBRA notice recipient simply declines COBRA and lines up his or her own temporary coverage. This is another benefit of doing business with Workforce Solutions, Inc. The health insurance experts at Workforce Solutions, Inc. can help your employees find the most cost effective alternative to COBRA.

But the plans aren’t right for everyone. Here are four need-to-know issues:

• Plan expiration. Coverage under a short-term plan runs out faster than COBRA. While some policies offer coverage for up to a year, the majority run out within six months. The ideal temporary coverage enrollee is someone who expects to have a source of full-time coverage available in a month or two.

• Intended for major medical issues. In most cases, short-term plans health plans aren’t designed to meet routine healthcare needs. Rather, they are there to cover serious injury or sudden illness.

• Service limitations. While the plans often cover an array of high-cost medical issues (hospitalization, emergency surgery, etc) and prescription drugs, some major services most notably pre-natal care may be excluded.

• Deductibles. While the plans often carry much lower premiums than COBRA, they often come with high deductibles. Once deductibles come into play, it may cost the employee less money out-of-pocket to accept COBRA.

If you would like to help reduce your COBRA paperwork and cost, contact one of our HR Benefit Specialists today or tell Workforce Solutions, Inc. how you manager your COBRA by leaving a comment below.