New Rule Creates Opportunity for COBRA Administrators

We’ve said it again and again – this law is what you make of it. If you believe it’s going to cause you to lose business, it probably will. But if you instead see it as an opportunity to grow your business, then you have a chance to make a lot of money.

Take the recent proposed rule from the Department of Labor as an example. We all know that COBRA isn’t going away because of the Affordable Care Act, though there has been some debate about whether it will be as popular as it’s been in the past. With individual plans now guaranteed issue, people with pre-existing medical conditions may have a better option than continuing the group plan at full price, especially if their income level qualifies them for a premium tax credit in the individual market.

The good news for COBRA administrators, though, is that, whether exiting employees sign up for COBRA or not, the notification requirements aren’t going away. Now, thanks to a May 2nd proposal by the Department of Labor, COBRA administrators have two new opportunities to grow their business:

1) First, as The Daily Caller explains, the proposal “would require employers to notify workers leaving their jobs that they’re eligible to purchase Obamacare exchange coverage.” Anytime a compliance requirement is changed, the odds that employers will choose to outsource the compliance administration is increased. Administrators can use the new proposed requirement as a reason that brokers and employers might want to use their services.

2) The bigger opportunity, though, is that these COBRA administrators could actually sell some insurance as a result of this requirement if they have a private exchange website. A number of HPA’s partners are third-party administrators, many of whom sell COBRA administrative services. Obviously, for their broker clients who sell individual plans, possibly through their own private exchange, they would want to direct these outgoing employees to the broker for assistance with subsidy-eligible plans. But for those brokers who don’t sell individual health insurance, as is the case with a number of large consulting firms that typically recommend that their employer clients outsource their COBRA administrative services, TPAs now have a huge opportunity to set these former employees up with individual plans and collect a monthly commission rather than a monthly administrative fee. If it’s true that more people will opt for ACA-qualified individual plans than COBRA continuation coverage, this could add up to a lot of business.

If your company provides COBRA administrative services and you don’t yet have an individual solution for COBRA-eligible employees, click here to learn about your options.

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