Employer Insight: Impact of Employer Subsidized COBRA : simplebooklet.com

onedigital.com ©2025 OneDigital | HR Consulng Disclaimer: The statements made herein are informaonal only and are not legal advice. Because applicable laws change, the informaon provided may become outdated. OneDigital makes no express or implied representaons or warranes arising by law or otherwise, all of which are expressly disclaimed. As part of a severance or buy-out agreement, employers oen pay for all or part of a terminated employee’s COBRA premium, for a dened length of me. This pracce may cause terminated employees to miss opportunies to enroll in other coverage, at a potenally lower cost, when the employer subsidy ends. Therefore, employers may want to either coordinate the length of COBRA subsidies with these opportunies or instead provide a taxable lump sum amount so that terminated employees may purchase any available coverage. The terminated employee and any covered family members have the following enrollment opportunies when the employer group plan is lost: • When re-employed, enroll in the new employer’s group health plan, if available. Employer plans may have a waing period before coverage begins and will have an enrollment deadline. • Remain on the employer’s plan by elecng COBRA, for up to 18 months. Once elected, COBRA provides coverage retroacve to the loss of coverage date. COBRA can be elected unl other coverage is eecve. • Enroll in the spouse’s employer’s plan, if available, within 30 days from the date of loss of coverage (HIPAA special enrollment right). The eecve date of coverage should be conrmed with the spouse’s employer. • If under age 65, purchase individual coverage through the Health Insurance Marketplace or direct from an insurance carrier. Individual coverage must be purchased within 60 days from the date of loss of group plan coverage, when the COBRA maximum coverage period expires (Marketplace special enrollment periods), or during the annual enrollment period for coverage eecve January 1. Individual coverage is generally prospecve from the applicaon date, so there may be a gap in coverage if someone waits unl the group plan is lost to apply. If enrolled through the Marketplace, federal subsidies may be available towards the cost of coverage. • If age 65+, enroll in Medicare, if not already enrolled. Medicare will pay as primary and needs to be in force at terminaon of employment if there is no other group coverage in force due to the employee’s or spouse’s current employment. From the date enrolled in Part B, there is a 6-month Medigap enrollment period. From the date that the employer’s plan with creditable drug coverage is lost, there is a 2-month Part D prescripon drug plan enrollment period. Example 1. Bill is single, age 40, and has no other employment at the me of his terminaon of employment from Acme on May 30th. Acme provides Bill with 3 months of paid COBRA from June 1 to August 31 under a severance agreement. Sll unemployed, Bill waits unl August 15th to look for other coverage, but he has lost his opportunity to purchase individual coverage. To remain insured, Bill must connue on COBRA, at his cost, Impact of Employer Subsidized COBRA E M P L O Y E R I N S I G H T EMPLOYER INSIGHT em em EMPLOYER INSIGHT

Employer Insight: Impact of Employer Subsidized COBRA

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