The new health benefits continuation subsidy has led to a sharp increase in the percentage of departing workers who take up continuation benefits.
Consultants at Hewitt Associates Inc., Lincolnshire, Ill., have published that conclusion in an analysis based on a review of Consolidated Omnibus Budget Reconciliation Act continuation benefits activity at 200 large U.S. employers.
From March to June, the percentage of U.S. residents at the companies who were eligible for COBRA benefits and actually enrolled increased to 38%, up from 19% for the period extending from September 2008 through February, before the COBRA subsidy provision was signed into law.
Employers previously could require involuntarily terminated workers to pay 102% of the health care premiums to continue their group benefits.
The new COBRA law permits involuntarily terminated workers to pay just 35% of the premiums. Employers pay the rest of the premiums and administrative costs, and the government is supposed to reimburse employers for the 65% of the premiums that they are paying.
