Monday, August 20, 2012

Plan to fix COBRA and help small businesses

The income I make administering COBRA for employers aside, I have always thought it was a terrible idea. Not just because it was so poorly written that employers had to spend two decades in court to learn to comply, but why should employers be liable for the medical care of ex-employees?

The most ironic part of COBRA, as implemented, is society determined we should help those losing their insurance transition to new insurance, yet society passed the cost onto a very small population of people. People only take COBRA if the premium is less then they expect to have in claims; very few people take COBRA because it is the responsible thing to do. Employers can expect COBRA electors to not only be money losers but big time money losers, that keep a hand in their pocket for 18, 29, or 36 months.This burden doesn't fall on society but 25, or how ever many people work at the company, people that are unfortunate to have worked with this individual, or a family member, previously.

I have seen healthy groups turn into max rated cases or companies even have to drop insurance due to cost from COBRA enrollees. If you believe the public should step up and help these individuals then the public should foot the bill.

I would suggest that individuals eligible for federal COBRA be enrolled into Medicare under the same provisions as current law. Eligible for 18-36 months, ends when other coverage is available, priced at a more age appropriate rate. Not only would this end the burden on employers but would lower cost if Medicare could ever do anything about their fraud as Medicare reimburses less then most private insurance.

CMS, through the IRS. would also be in a far better position to police individuals becoming eligible with other coverage.

Employers could then invest this savings in current employees and their benefits. They would also be out from under the huge liability of sending a notice to the wrong address or failure to comply with other notification requirements that could bankrupt them.
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