More Workers Using COBRA Benefits Even without the Subsidy

August 19, 2010 (PLANSPONSOR.com) - A new analysis by Hewitt Associates shows that many workers are continuing to enroll in COBRA for health care insurance, despite the high price tag and the end of the government COBRA subsidy.

According to a press release, the analysis of 200 large U.S. companies found that the average COBRA enrollment rate for workers who were voluntarily or involuntarily terminated from their jobs since 2004 was 21% in June 2010 - significantly higher than the historical monthly average enrollment rate (12%) but slightly lower than overall enrollment rates during the period that the COBRA subsidy was available to involuntarily terminated employees (25%).

When looking only at the subset of workers who were involuntarily terminated and eligible for the COBRA subsidy, Hewitt’s analysis showed the average monthly enrollment rate was 38%, with enrollments peaking in June 2009 at 46%. For May 2010—the last month that the subsidy was available—the COBRA enrollment rate for involuntarily terminated workers was 31%.

Hewitt noted in the announcement that under the COBRA law, terminated workers may continue employer-sponsored health coverage by paying 100% of the health care premium plus an additional 2% to cover administrative costs, which translates to roughly $8,800 a year in COBRA health care costs for the average worker. The COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA) requiring eligible employees to pay only 35% of the COBRA premium lowered that cost to about $3,000 a year for the average worker.

Rebecca Moore
editors@plansponsor.com