Often, when parting ways with an employee, an employer may offer to pay for some months of COBRA continuation coverage so that the employee can remain covered without having to pay the substantial premiums associated with COBRA. Historically, this always seemed like a solid gesture from the employer and a “no-brainer” from the employee’s standpoint. However, with the implementation of the Affordable Care Act (“ACA”), employees who part ways from their jobs now have another option—purchasing insurance via the ACA “marketplace,” which may be less expensive. Because of the intertwining of potential timing issues between electing and obtaining COBRA continuation coverage and the opportunity to purchase insurance in the ACA “marketplace,” employers must give additional thought to the typical employee separation and offer of a severance package.
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