Close Close
ThinkAdvisor

Life Health > Health Insurance > Health Insurance

Ceridian: COBRA Subsidy Use Was Low

By staff Writer

X
Your article was successfully shared with the contacts you provided.

Helping laid-off employees pay to continue group health benefits led to an increase in continuation rates, but not as much as policymakers had hoped.

Ceridian Benefits Services, St. Petersburg, Fla., a benefits administration unit of Ceridian Corp., Minneapolis, is estimating that the takeup rate has increased to 18%, from 12%. Although the participation rate is higher than it used to be, the increase was lower than many members of Congress and others had expected, the firm says.

In the past, workers who were eligible for the Consolidated Omnibus Budget Reconciliation Act health benefits continuation program had to 102% of the cost of the underyling health coverage.

This year, as a result of the COBRA subsidy provision in the American Recovery and Reinvestment Act of 2009, laid-off employees can pay just 35% of the cost of the coverage. Employers must pay the other 65% of the cost, but the federal government is supposed to reimburse employers for COBRA expenditures.

The COBRA subsidy takeup rate may be low partly because employers had a hard time implementing such a complicated new law as quickly as Congress told them to, Ceridian Benefits says.

Companies also had a hard time distinguishing between employees who were eligible for COBRA subsidies because they were involuntarily terminated and employees who left voluntarily, the firm says.

“Keeping complexity to a minimum, or providing policy consistent with existing COBRA rules, would have simplified processes considerably, saved resources and potentially increased participation,” Ceridian Benefits says.