How the New COBRA Rules Affect Health Insurance Planning

At a time when health insurance coverage is of vital importance, what are the options for your newly unemployed clients? The answer to that question depends on a new regulatory change involving COBRA coverage.

In “normal” times, I counsel clients facing health insurance decisions when leaving employment at least a couple time during the year. But because the coronavirus pandemic has caused unemployment to balloon, I have some clients like “Jane.”

She is a salesperson in a niche specialty field and was laid off in May. The pandemic forced the company to drastically reduce operations and it is likely her job will not come back. The cost of COBRA would have been almost $600 per month. My firm is helping her evaluate her options, and if she does not find a job by the end of the year, we will assist her with income planning to obtain tax credits for insurance through the ACA and she will apply for insurance during the open enrollment period in November.

I expect an uptick in the number of clients like Jane. A study by the Robert Wood Johnson Foundation estimates more than 10 million people will lose employer-sponsored health insurance as a result of the pandemic.

Good health insurance decisions take into account the cost of coverage, client health status, income, and client preferences for health insurance. Additionally, changes in COBRA rules and coverage related to COVID-19 could be pertinent. In this article, I explain the COBRA rule changes and create a “decision tree” to help your clients make an informed choice regarding their health insurance should they become unemployed.