The COBRA Blog

PPACA exchanges could be best option for some part-time and COBRA-eligible workers

Posted by Robert Meyers on Mon, Sep 16, 2013 @ 11:09 AM

Part-time and seasonal workers have been an integral part of business for decades. Large retail chains, supermarket chains, restaurant and food chains, and hospitality services all employ large numbers of part-time employees.

But these employees have traditionally had little or no opportunity to buy affordable health insurance. That was one of the main arguments for the Affordable Care Act (ACA), and the plight of part-time employees remained a key consideration throughout the reform process. Since part-time workers tend to have low wages, it’s impossible for many to purchase decent insurance on their own. Yet their family incomes are often just high enough that they don’t qualify for Medicaid.

Under the Affordable Care Act, employers must offer health insurance to all employees who work 30 hours or more per week. That requirement is forcing many employers to make some tough decisions. While some companies who currently offer limited benefits for part-time workers will continue to do so, others are either cutting employees’ hours to keep them under the 30-hour threshold, or dropping benefits for part-time workers altogether. And the private sector isn’t alone in cutting hours for part-time employees, with more than 200 public-sector employers reducing hours to avoid penalties.

Will the new law make it any easier for part-time workers to get insurance?
According to a recent survey of more than 100 large employers by the National Business Group on Health, part-time workers could have better luck finding affordable coverage under the new health insurance exchanges.

Part-time workers that aren’t offered health insurance through their employer can use the exchanges to find a plan, and they may be able to get lower costs on monthly premiums and out-of-pocket costs based on their household size and income. They may also qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP).

Part-time workers who can get coverage through their employer can still buy insurance through the exchange, but they won’t be able to get lower costs based on their income, and they won’t be eligible for the federal subsidies unless the coverage the employer provides isn’t considered affordable or doesn’t meet certain minimum standards.

How will the new law impact COBRA-eligible workers?
The biggest problem with COBRA coverage has always been its expense. COBRA plans can cost workers $1,000 to $1,500 a month depending on type of coverage. According to the National Business Group on Health survey, those who currently rely on expensive COBRA plans could also find more affordable options under the exchanges.

Starting January 1, 2014, individuals with a COBRA-qualifying event will have the choice of either purchasing COBRA coverage or purchasing coverage through the exchanges. While COBRA only allows people to elect the coverage in which they were enrolled on the date they lost their job, the exchanges will offer a variety of options and coverage levels. And the premium subsidies available to individuals with household incomes up to 400 percent of the federal poverty level are expected to make buying coverage through an exchange more attractive than buying expensive COBRA coverage.

Of course, the Affordable Care Act doesn’t offer a single one-size-fits-all solution for everyone in every state and every industry. Employers will need to carefully weigh the pros and cons of cutting staff hours to avoid penalties, as fewer hours could affect employees’ sense of investment in the company and hold hidden costs. And part-time and COBRA-eligible workers should explore all of their options under the exchanges before purchasing coverage.

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Tags: ppaca, cobra coverage, COBRA software, COBRA qualifying event, ppaca exchanges, cobra eligible workers

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