Customer Story
National Business & Technology Consulting Firm
How a National Consulting Firm Gave Early Retirees a Funded Bridge Beyond COBRA — Avoiding a Projected $367K in COBRA Costs with $55K in Benefit Spend
Location
Chicago, IL
Industry
Business & Technology Consulting
$367K
projected COBRA costs avoided
Background
This story will be familiar to any professional services organization: a national business and technology consulting firm whose workforce, like many of its peers, includes senior employees who retire early, in this cohort at an average age of 59, close to Medicare eligibility but not quite there. Every employee in this engagement was experiencing a COBRA qualifying event: their employment, and with it their group health coverage, was ending.
The Challenge
Early retirees leaving your company, or any Medicare-age employee going through a COBRA qualifying event, can be some of the most expensive members to remain on your plan. This retiree population splits into two groups.
The first is already Medicare-eligible, and for them COBRA should not even be on the table: past 65, it does not count as creditable coverage, so staying on it can trigger permanent Medicare late-enrollment penalties. Most employees have no idea. Left without guidance, they elect the familiar option and end up paying for it twice, in premiums today and penalties later, all while the employer’s plan absorbs some of its highest-cost claimants.
The second group is close to eligibility but not quite there. That is where this firm’s cohort sat, at an average age of 59: too young for Medicare, attached to the coverage they knew, and rationally inclined to ride COBRA all the way to 65 if nothing better came along. Either way, COBRA is the wrong default. For this firm, that meant a cohort of early retirees who were strong candidates to elect COBRA for the full 18-month maximum, the most expensive outcome for everyone involved.
The Solution
Rather than leave the decision to the default, the firm worked with When, the workforce transitions platform and a licensed insurance agency, to offer each departing employee a When Benefit: a fixed-dollar contribution toward a COBRA alternative, whether Medicare enrollment for those already eligible or an ACA marketplace plan for those bridging the gap.
The design principle was right-sized, not open-ended. The average benefit was $11,000 per employee, enough to fund roughly 7 months of covered runway, sized to a realistic transition period rather than to 18 months of worst-case COBRA premiums. Without the When Benefit, this cohort would have defaulted to COBRA; with it, they had a funded bridge that encouraged a better choice.
The Results
The math came out decisively in everyone’s favor. The firm funded $55,000 in total When Benefits across the cohort and avoided a projected $367,000 in COBRA claims costs, a roughly 6.7x return on the benefit spend. A formerly unpredictable, high-cost outcome became a controlled and planned expense.
“We knew this group would default to COBRA if we let the moment pass. It is what everyone does, and it is the worst outcome for them and for the plan. The When Benefit let us hand each person a funded path to coverage that was a better fit for their situation. It was the rare benefits decision where the generous thing and the fiscally responsible thing were the same.”
HR leader
“Most employers do not see this cost coming. When an early retiree departs, COBRA is the default, and it is almost never the right answer for the person or the plan. The When Benefit redirects that default with a funded choice: Medicare for those who are eligible, a marketplace plan for those bridging the gap. This client spent $55,000 and took a projected $367,000 off the table. That is what happens when you strategically design your early-retiree exit.”
Andy Hamilton, CEO and Co-Founder, When
Model Your Own COBRA Claims Savings
Every employer’s population is different — age mix, plan costs, and state rules all move the number. Before your next wave of departures, build your offboarding plan before you need it, and connect with our team to model your projected COBRA exposure and a right-sized When Benefit for your workforce.
