The COVID-19 pandemic has led to the unemployment of more than 30 million Americans. Among the many challenges and uncertainties unemployment brings, how to receive health insurance coverage ranks high. Given the heightened health risk of the pandemic, this concern is more important than ever.
Here are some ways advisors can educate their clients about the options available and guide them to the best choices as they transition to unemployment.
Where should advisors begin when a client has been laid off?
One of the most important details to clarify right away is when your client’s health insurance coverage ends. Some employer-sponsored coverage ends the last day of employment but, more commonly, it continues through the end of the month in which an employee was laid off. Once that month is over, your client will have several options.
Those who don’t anticipate having many health care needs, or who have significant savings in a health savings account (HSA), may feel comfortable exploring the Affordable Care Act marketplace, or the increasingly popular concierge care or direct-care services. Clients with chronic conditions that require frequent care or who want more comprehensive coverage should consider enrolling in COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA allows people to continue receiving their employer-sponsored coverage by paying the full monthly premium.
We’ve received feedback in the past that COBRA can be confusing. What are your thoughts on that?
It’s true that under normal circumstances, only a small percentage of individuals eligible for COBRA actually enroll. This is typically due to confusion around enrollment and the high premium cost, which may feel too expensive for those now without a regular source of income due to loss of employment. However, COBRA can be critically important and well worth the price, especially during a global health crisis like we’re experiencing now. Advisors can play a key role in demystifying COBRA and making the benefits clear, so that clients take advantage of it in their time of need.
What are the true benefits of COBRA?
COBRA has many benefits that may outweigh the cost of the premium. Continuity of care is a big one. Those with chronic conditions or who receive frequent health care services may save money in the long run by continuing comprehensive employer-sponsored coverage under COBRA. Further, if they have a physician or hospital relationship that would change with new insurance coverage, COBRA allows them to continue with this trusted care.
COBRA is also the quickest, simplest way to receive short-term protection. Researching and enrolling in a marketplace plan may not be worth the effort, especially if your client has reason to believe their coverage gap will last only 30 to 90 days before they get back to work.