By Staff Report
Aug. 19, 2010
The percentage of laid-off employees that opted for COBRA coverage after the government offered a premium subsidy for the health care coverage was double the percentage that opted in during five months prior to the subsidy, according to a study.
Under the subsidy program, which was embedded in an economic stimulus measure Congress passed in February 2009 and later extended and expanded, the federal government pays 65 percent of the COBRA premium for up to 15 months for involuntarily terminated workers.
From March 1, 2009, when the subsidy first generally became available, through May 31, when the program ended for employees laid off after that date, monthly enrollment rates for laid-off employees averaged 38 percent, according to the Hewitt Associates Inc. analysis of COBRA enrollments among 200 large employers.
By contrast, from September 1, 2008, through February 2009, an average of 19 percent of involuntarily terminated employees enrolled in COBRA.
With the end of the subsidy, COBRA enrollment rates now are falling. “Enrollment rates will likely decline over time as workers can’t, or aren’t willing to, afford the high premiums associated with COBRA coverage,” Karen Frost, Hewitt’s health and welfare outsourcing leader in Lincolnshire, Illinois, said in statement.
In addition, employees who were laid off in June and enrolled in COBRA expecting that Congress would retroactively extend the subsidy—as it previously did—may drop the coverage as it has become clear that legislators will not extend the subsidy, Frost said.
Congressional support for extending the subsidy has dwindled amid concerns by Republican and some Democrats about the cost of the subsidy.
Congressional budget analysts estimated that the initial subsidy law, in which laid-off employees were entitled to the subsidy for nine months, would cost the government nearly $25 billion.
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