Boca Benefits Consulting Group Inc.

In doing some research for a LinkedIn member relative to COBRA eligibility it seems an inconsistency has been detected between (1) long-standing COBRA regulations pertaining to early termination rules and (2) the regulations requiring early termination of the the present 65% federal subsidy. 

Although this inconsistency may be nothing more than an oversight on the part of DOL, it would appear to be more fundamental relative to its overall intent going forward. The newer intent seems to be much more business friendly (i.e., no expense associated with a non-productive former employee). It may not be so much altruistic as the real politic of what has been required to get health reform issues through a divided Congress.

In the specific case, the 65% federal subsidy will be terminated if a former employee is so much as eligible for a new employer plan. No enrollment in the new plan is required for the previous employer to require the full 102% premium to be paid (i.e., as opposed to 35%) to remain in COBRA.  It is purely a matter of eligibility. Unquestionablly, the net result will be less people on COBRA and more people enrolled in their new employer plans. Employers with a sizeable number of COBRA participants should see substantial savings if they monitor this provision closely (i.e., some form of periodic written statement from the COBRA participant that they have never been eligibile for another group plan from the inception of their COBRA participation, either personally or via spouse).

Note that this is not an allowable early termination event as previously defined by DOL where actual enrollment has been required before a former employer can terminate a former employee’s COBRA participation. In this case COBRA termination would be a voluntary former/new employee act based on the relative economics. 

The subsidy regulation above appears to be in line with the “To Age 26” provisions of PPACA 2010 as we understand them. In that case, the parent’s employer can also terminate an adult dependent’s eligibility for its healthplan based solely on eligibility for a new employer’s plan. Again, no enrollment is required for this action. The pure eligibility is the key.

Both the subsidy and the adult dependent regulations seem to reflect the true purpose of all these healthcare delivery mechanisms. The underlying intent has been to ensure that there is a mandatory safety net for those who would lose employer based coverage and have absolutely no other alternative. If there is an alternative, than there is no reason for that safety net (n.b., and the associated non-productive costs) to exist.  None of these devices have been put in place to allow for “plan shopping” on the part of an employee who might otherwise have mutliple eligibilities.

DOL needs to address the COBRA inconsistency and re-write the regulations going forward to allow for early termination of COBRA based solely on eligibility. Rarely, if ever, will there be a negative economic impact on an employee who will revert from 102% of premium to somewhere in the area of 75% of premium (i.e., assuming here a 25% employer contribution). This may require large employers to leverage local politicians if the various applicable federal statutes require amendment.


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For those persons who prefer to do business with a long-established insurance carrier in the individual healthcare market, BBCG offers United Healthcare’s “UnitedHealthOne” (f/k/a Golden Rule) products. Various traditional, high deductible, point-of-service and HSA products are available. Please feel free to use this service to explore options that you feel might meet your needs.

Please click on the above Golden Rule icon to open the auto-quoting page. This is a free and non-binding service unless the user actually submits an application.

This service is in addition to the similar auto-quote function provided by BBCG via the CIGNA individual/small group market segment per our earlier blog entry at http://bocabenefits.com/blog/?p=588.

Both CIGNA and United Healthcare offer individual products as solutions to the “To Age 26” gap many college seniors may face while waiting for eligibility under one of their parent’s health plans.


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In addition to the UnitedHealthOne (f/k/a Golden Rule) individual products auto-quote function from United Healthcare , BBCG now has a similar auto-quote function available for CIGNA products. Just click on the CIGNA logo above to open the quoting window.

Like the UnitedHealthOne products, CIGNA products also address the “To Age 26” issue for graduating college seniors.

This is a free and non-binding process unless an application is actually submitted by the user. 


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I am sending this along as an example of minimal costs to cover a 22 year old, male graduating college senior, aging out of parents’ plan(s), living in Clearwater, Florida, selecting the better of the two short term options available. The $1,000 deductible option costs $391.74 for six months of coverage. Most seniors will need seven months for $616.99 (yes… there is a big step in premiums from six to seven months) if they can enroll on Jan 1st in one of parent’s plans. See http://bocabenefits.com/short_term_med_examp.pdf for the cost details. See https://www.goldenrulehealth.com/PDF/38491-G200906.pdf for a product brochure.

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Yesterday I read the results of a survey conducted by a large national HR consulting company which indicated that only 16% of employers intend to implement the “To Age 26” provision of PPACA early to accommodate graduating college seniors. Most existing plans, which are “grandfathered” by definition (i.e., in existence on March 23, 2010) will defer making the offering until the first anniversary/plan-year date following the mandatory statute date of September 23, 2010.

The Impact

1. Many graduating college seniors will not be eligible until January 2011 when the majority of plans have plan-year dates.
2. Some will have to wait even longer if plan-year date is later than January 1st.
3. Some could have to wait as long as August 2011 if the plan has an odd summer/fall plan-year date.
4. Same goes for other “adult children” up to age 26 who thought they would become eligible immediately.

BBCG brokers permanent individual coverage. However, we also have short-term temporary coverage for this type of situation. If you know anyone who falls into the above categories, please have them go to http://bocabenefits.com/ind_health.htm where they can access a self-directed quoting service from United Healthcare’s “UnitedHealthOne” (f/k/a Golden Rule) products. The second screen following the initial zip code screen allows for selection of the short-term product.


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CIGNA is hosting an educational teleconference on the subject of early implementation of the “To Age 26” provision of PPACA. Valuable for all employers sponsoring employee health plans (i.e., both insured and self-funded). Possibly broker and CIGNA client oriented. However, pertinent to all regardless of present carrier and/or TPA.

CIGNA teleconference registration link.

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