ARRA, DOD, TEA, CEA. Do you remember and long for the days when COBRA had only five letters? Today it has become acronym soup, and our notices to qualified beneficiaries all start with a delightful string of laws, “the American Recovery and Reinvestment Act of 2009, as amended by the Department of Defense Appropriations Act of 2010, as amended by…” What has happened to COBRA in the last 16 months, and what does the future hold?
In the last 16 months, employers have become more acutely aware than ever of COBRA and their need to properly manage this area of liability. Employers who have traditionally administered their COBRA compliance in-house are now looking to outsource, and employers who already outsourced COBRA have short trigger fingers. Brokers too are pulling their clients’ COBRA business from long-term partners and moving it to new partners or building their own COBRA administration practice in-house to serve their clients directly. The industry, like the law, is in the midst of significant change.
When we look at the industry today, what we see is probably not surprising. The administrators running tight, process-driven operations with an outstanding commitment to service are booming. Conversely, the old model of running COBRA administration like a black box is dying on the vine. Employers are no longer willing to throw qualifying events over the fence and cross their fingers. Successful COBRA administrators today are utilizing modern technology—not just because it enables more rapid response to change and not only because it empowers them to run more efficient operations—but because it allows them to utilize the web to provide better service and total transparency to their clients.
The “old-fashioned” concept of service will always be the key differentiator in any business process outsourcing industry, but in today’s modern world good service means “get me the necessary information without making me wait.” This doesn’t eliminate the need for an outstanding, efficient, professional call center and traditional personal service. After all, we’re talking about a trust relationship between an administrator and an employer. It does mean that we need to extend the traditional concept of good service to include offering our employer clients and their qualified beneficiaries (QB) any time, any place access to their data through secure, HIPAA-compliant web portals. If we want our clients to trust us, we need to be willing to show that COBRA is not a black box and offer total transparency to the clients we serve.
What does the future hold for COBRA? Certainly in the short term (through 2010) we expect Congress to continue to extend the COBRA premium reduction provisions of the ARRA in one or more additional acts, which will add more acronyms to our COBRA vocabulary. In the longer term though, how and when might health care reform impact COBRA? Technically, both the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 are silent on COBRA. In other words, they don’t impact COBRA explicitly at all. Presumably, given current law, when the new state insurance exchanges come into existence in 2014, new COBRA QBs will have options, just like they have now.
Today QBs may elect COBRA, buy a personal policy, or have no insurance. In 2014 new QBs will be able to elect COBRA, buy a personal policy on the open market, or buy a personal policy through their state insurance exchange. They simply won’t be able to forgo insurance without penalties given the personal mandates in the new laws. Will there really be a need for COBRA though when the state insurance exchanges are operational? Only time will tell, and in at least this one instance, Congress showed wisdom in waiting to see what the future holds before making this decision.
John Jenkins is founder, president, and CEO of Benaissance, which provides an integration of SaaS technology and BPO services in the health care benefits administration and payments market. Benaissance provides core business technology and processing solutions for national third party benefits, administrators, and insurance carriers focused on COBRA and non-COBRA continuation of benefits. Contact John at sales[at]benaissance.com or www.benaissance.com.