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COBRA Enrollment Rises After Subsidy Enacted

December 23, 2009
Related Topics: Financial Impact, Benefit Design and Communication, Medical Benefits Law, Latest News
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Average monthly COBRA enrollment rates increased by 20 percentage points since the federal COBRA premium subsidy program took effect, according to a Hewitt Associates Inc. analysis.

From March 1—when the 65 percent premium subsidy generally first became available—through November 30, monthly COBRA enrollment rates for eligible laid-off employees averaged 39 percent, according to Hewitt’s analysis of COBRA enrollment among 200 large employers.

By contrast, from September 1, 2008, through February 28, 2009, an average of 19 percent of involuntarily terminated employees were enrolled in COBRA.

The largest percentage-point increases in COBRA enrollment were seen in the sectors of industrial manufacturing—to 67 percent from 7 percent—and aerospace and defense, where enrollment rose to 63 percent from 30 percent, according to Hewitt’s analysis.

“The increase we’ve seen in COBRA enrollments since March highlights how important the subsidy benefit has been to families who have been affected by the high rate of unemployment,” Karen Frost, health and welfare outsourcing leader for Lincolnshire, Illinois-based Hewitt, said in a statement.

With nonsubsidized COBRA premiums often about $400 a month for individual coverage and $1,200 a month for family coverage, the subsidy has slashed health insurance premium costs for beneficiaries laid off from their jobs.

President Barack Obama last week signed a bill that extends the nine-month, 65 percent premium federal subsidy by six months. The change applies to those who are involuntarily terminated through February 28, 2010.

The legislation also provides an additional six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

Filed by Matt Scroggins of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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