Those who are willing to pay the high cost of COBRA often do so because they’re sick and need the coverage. On one hand, that’s why it’s great that COBRA coverage exists. On the other hand, everyone knows that COBRA comes with a hefty price tag, not just for the former employee, but also the employer. According to Spencer’s Benefits Report, the average COBRA member costs an employer 54% more than the average active worker.
Here are some other facts you may not have known about COBRA that can impact your annual healthcare costs:
- The average COBRA enrollee costs employers $11,000 in annual costs (vs. $7,204 for the average active worker).
- The average rate of COBRA uptake by terminated employees is 10 percent.
- The average recipient stays on COBRA 7.4 months.
- Having former employees on COBRA can make a company more of a risk to insurers when it comes time for annual renewals, or when shopping around for new plans. It’s estimated that a company will start getting declined by carriers if it has more than 10 percent of its population on COBRA.
- The Affordable Care Act created new options for former employees and employers when it comes to health insurance.
- As many as 60% of Americans aren’t even aware that there’s an alternative to COBRA—one that could cost them much less. Educating your employee population on options under the Affordable Care Act can save you money in the long run.
- 46% of terminated employees choose an exchange plan versus COBRA or having no insurance at all when given the option.
Education and outreach can be critical in moving the needle when it comes to lowering COBRA costs. If you’re not sure where to start, give us a call.