What we offer that COBRA does not
When we think of COBRA (Consolidated Omnibus Budget Reconciliation Act) we often think of its high cost impact on employees. However, COBRA can have a significant cost impact on employers; especially a PEO (Professional Employer Organization).
Health insurance costs are critically important to a Professional Employer Organization (PEO) for several reasons, as they directly impact the financial stability, competitiveness, and overall success of the PEO. PEOs aim to provide cost-effective HR solutions to their client companies. By managing health insurance costs, PEOs can offer competitive pricing to attract and retain clients. COBRA participation can be a major risk to a PEO’s health plan and pricing.
COBRA participants on average are 3x more expensive than active employees. If a significant number of employees within a PEO’s client base elect COBRA, it may impact the overall risk pool. High healthcare utilization among COBRA participants could lead to increased insurance premiums for the entire group.
High COBRA participation can influence the PEO’s negotiating power with insurance providers. Insurers may adjust premium rates based on the overall risk profile of the PEO’s health plan, which includes both active employees and COBRA participants.
Additionally, employees leaving the PEO may have questions and concerns about COBRA and their options. Providing effective communication and support is essential to managing the process smoothly. Due to the financial impact of COBRA on the PEO’s health insurance plan, communication about alternatives to COBRA is even more important. This is where When Insurance (When) steps in to partner with a PEO.
When is an ideal PEO partner solution to improve the employee off-boarding experience, and provides a PEO significant risk mitigation by reducing COBRA participation. When is an off-boarding technology platform that includes a concierge service to assist employees exiting the PEO with finding affordable alternatives to COBRA. Also, When offers a healthcare severance solution called the When Benefit that supplants COBRA subsidies in a severance package.
When delivers a win-win solution to a PEO. The PEO is able to offer an improved and differentiated off-boarding experience for their clients while reducing costs to their health insurance plan.