While the Affordable Care Act (ACA) didn’t change COBRA laws, rules or pricing, it did change demand by opening up alternate, oftentimes much less expensive, options for Americans. Consumers can now shop for insurance on the Marketplace, free from pre-existing clauses, with access to comprehensive plans, thanks to guaranteed minimum essential coverage rules.
Okay, that was a mouthful, so let’s break it down:
Marketplaces: Many are very familiar with the Marketplace by now, but just to recap, Americans can either shop for health insurance on Healthcare.gov (the federal marketplace), or through their state health insurance exchange, depending on whether or not their home state set up its own marketplace. Currently, there are 13 states that have opted to run their own marketplace. There are also sites like GetInsured.com that give consumers access to their options, through consumer-friendly interfaces.
Pre-existing conditions: Under the Affordable Care Act, health insurance companies can no longer refuse to cover folks or charge them more just because they have a “pre-existing condition”. Generally, a pre-existing condition is defined as any condition for which the person seeking health insurance coverage has already received treatment for prior to enrolling in a new plan. Also, as part of the ACA, women cannot be charged a higher premium than men. If you read part one of this series, you can see how this particular point was helpful for millions of Americans like Jennifer.
Minimum essential coverage: Shopping on the marketplace gives consumers access to health insurance plans that cover essential health benefits within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.*
With help from tax credits, many Americans qualify to save even more on their monthly premiums, making the Marketplace a much more viable option than enrolling in COBRA coverage. In most cases, active employees with group insurance had the benefit of their employer contributing to their monthly premium, so they didn’t feel the full cost burden of their plan. Once they enroll in COBRA, all of that changes. The former employee becomes responsible for the full monthly premium plus a two percent administrative fee.
Consider how meaningful tax credits can be. You’re a single mom with two kids and you’ve just lost your full-time job. While you plan on getting back into the job market right away, finding a new job can take time. You need to ensure that your children are covered, but the family plan your company was helping you pay for was $1,462 a month.** Add in the administrative fee and you’re now looking a paying $1,491 per month for health insurance—with little (unemployment) or no income. That doesn’t leave much for food, rent and living expenses. This is the point where many choose to forego coverage.
But now, thanks to the ACA, COBRA is no longer the only way for families to access health insurance.