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Life Health > Health Insurance > Health Insurance

COBRA Subsidy Boosts Enrollments: Hewitt

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Average monthly enrollment rates in COBRA health care plans among subsidy-eligible employees have increased by 20% since COBRA financial assistance began in March 2009, a new analysis from Hewitt Associates Inc. finds.

COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1986, requires employers offering health care benefits to allow most involuntarily terminated employees to continue their group health coverage, if they are willing to pay for it. COBRA applies to employers of at least 20 workers that offer health care benefits.

Under the American Recovery and Reinvestment Act of 2009, the Federal government has been subsidizing COBRA coverage for many workers who were involuntarily terminated on or after Sept. 1, 2008 through Dec, 31, 2009.

President Barack Obama recently signed the Department of Defense Appropriations Act for Fiscal Year 2010, which lengthened the duration of the COBRA subsidy from 9 months to 15 months for eligible employees and their dependents and extends the subsidy to those who lose their jobs on or before Feb. 28, 2010.

Hewitt’s analysis examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees from March 2009 to November 2009. During that period, monthly COBRA enrollment rates for subsidy-eligible employees averaged 39% percent, compared to 19% for the period of September 2008 to February 2009–before the subsidy was enacted.

The subsidy under ARRA requires eligible employees to pay 35% of the COBRA premium, or about $3,000 a year for the average worker, according to Hewitt, Lincolnshire, Ill.

Under the original COBRA law, most involuntarily terminated workers were required to pay 100% percent of the health care premium plus an additional 2% to cover administrative costs. This translates to roughly $8,800 a year in COBRA health care costs for the average worker, notes Hewitt.


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