"We already offer COBRA subsidies to our departing employees. Why would we need the When Benefit?"

It's the most common question we hear from HR leaders and CFOs. And honestly? It's a great question.

Here's the uncomfortable truth: Your COBRA subsidy isn't just expensive, it's actively working against you. While you're trying to do right by your people, you're creating a financial trap that hits your bottom line twice: once through the subsidy itself, and again through the elevated claims that drive up premiums for the employees who stay.

The When Benefit changes this equation entirely. Let's break down why.

The Hidden Problem with COBRA Subsidies

When you subsidize COBRA premiums, you remove the primary reason people look for alternatives. You're making expensive coverage affordable, or even free, which sounds compassionate until you look at the numbers.

COBRA participants cost 300% more than active employees. They're typically your highest utilizers: people managing chronic conditions, navigating serious health events, or preparing for planned procedures. That's not a judgment—it's actuarial reality. And when these high-cost claimants stay on your group plan, they:

• Drive your experience modification factor higher

• Increase premiums for your active workforce

• Create adverse selection that impacts future renewals

• Generate claims that can easily reach six or seven figures

You're paying the subsidy amount upfront, then paying again, and again, through elevated group plan costs that affect every employee covered under your plan.

"But We're Self-Insured, We're Not Really Paying a Premium"

We hear this objection frequently from self-insured employers and their brokers. The argument goes: "Since we don't pay premiums to a carrier, subsidizing COBRA doesn't actually cost us anything."

This is not technically true.

Here's the financial reality: In self-insured plans, you're not avoiding costs. You're absorbing 100% of the risk with zero offsetting revenue.

The legal/administrative truth: While self-insured plans don't have traditional premiums, you still calculate a COBRA premium equivalent (the actuarial cost of coverage plus up to 2% admin fee) for compliance purposes. When you subsidize COBRA, you're forgoing that employee payment and covering the full cost yourself.

The financial truth (the part that actually matters): Because you're self-insured, you pay every claim as it occurs. A COBRA subsidy means:

• You continue bearing 100% of medical claims risk for former employees

• You absorb the COBRA premium equivalent you'd otherwise collect

• You carry unpredictable, high-dollar exposure with no offsetting employee contribution

Why this is especially dangerous for self-insured employers: Subsidized COBRA for self-insured plans is often more expensive than fully insured arrangements. Former employees who stay on your plan longer than expected generate claims that hit your financials directly, no carrier buffer, no risk pooling, just straight bottom-line impact.

You may not be "paying a premium" to an insurance company. But from a risk and cash-flow perspective, you're absolutely paying for the coverage, and carrying all the downside with none of the upside.

The When Benefit : Strategic Severance That Protects Everyone

The When Benefit reimagines severance as a powerful tool to reduce COBRA participation while still supporting your people. Instead of subsidizing expensive COBRA coverage, you're providing:

• Fixed-dollar reimbursement for alternative coverage (ACA marketplace plans, private insurance, or Medicare), not COBRA premiums

• Intentional risk transfer that helps high-cost claimants self-select out of your group plan and into coverage that better suits their individual needs and circumstances.

• Unused funds returned to your organization through a reimbursement model where employees only draw down the benefit as they incur healthcare costs, and any remaining balance stays with you.

• AI-powered guidance plus human support that makes finding the right alternative coverage simple, not overwhelming. Our platform compares thousands of plans based on the employee's specific needs—doctors, prescriptions, budget—then our white-glove concierge team provides empathetic support throughout the transition.

The result? You're still providing meaningful support during a difficult life event. You're just being strategic about where those dollars go, toward coverage that works better for the individual and protects your organization's financial health.

Understanding the Legal Framework

Benefits leaders often want clarity on one key question: Can employers offer incentives for employees to explore alternatives to COBRA?

The answer is yes. This approach is legally sound and backed by a comprehensive legal opinion from Fisher Phillips LLP, one of the nation's premier labor and employment law firms.

The framework is straightforward. Employers can provide incentives for employees to consider COBRA alternatives, provided the process respects employee choice:

We designed the When Benefit from the ground up to meet these requirements. Our Fisher Phillips opinion specifically validates that our approach raises no compliance issues under federal COBRA law. We handle:

• Compliant severance agreement language

• Clear communication that never misleads or intimidates

• Full disclosure that alternative coverage isn't COBRA

• Protection of independent election rights for all qualified beneficiaries

• Complete COBRA notice compliance alongside the When Benefit

Your employees still receive every COBRA right they're entitled to. They're just also receiving an attractive alternative that makes financial sense for their situation.

Making the Transition: Simpler Than You Think

Updating your severance policy to include the When Benefit doesn't require overhauling your entire benefits structure. Most companies follow a straightforward path that we’ve covered for you here. 

The Bottom Line: Compassion Doesn't Require Compromise

Your COBRA subsidy comes from the right place. You want to support people during difficult transitions. No one's questioning your intent.

But intent doesn't change financial reality. When you subsidize COBRA, you're funding an outcome that hurts both your organization and your active employees through elevated healthcare costs.

The When Benefit lets you maintain that compassion while dramatically improving financial outcomes for everyone involved. You're still providing meaningful support. You're still helping people navigate a scary transition. You're just doing it strategically.

Supporting your people and reducing costs shouldn’t be competing priorities. With the When Benefit, you can achieve both.