Hewitt Analysis Shows COBRA Enrollment Rates Remain High Despite Government Subsidy Program Expiration
19 Agosto 2010 - 10:18AM
Business Wire
A new analysis by Hewitt Associates, a global human resources
consulting and outsourcing company, 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. One
out of five terminated employees in Hewitt’s analysis enrolled in
COBRA coverage in June 2010—the first month where the subsidy was
not available—which is almost twice as high as historical,
pre-subsidy enrollment rates.
Hewitt analyzed COBRA enrollment rates for workers who were
voluntarily or involuntarily terminated from their jobs since 2004.
This analysis of 200 large U.S. companies, representing 8 million
employees, shows that the average COBRA enrollment rate for these
employees and their dependents was 21 percent in June 2010. This is
significantly higher than the historical monthly average enrollment
rate (12 percent) but slightly lower than overall enrollment rates
during the period that the COBRA subsidy was available to
involuntarily terminated employees (25 percent).
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
percent, with enrollments peaking in June 2009 at 46 percent. For
May 2010—the last month that the subsidy was available—the COBRA
enrollment rate for involuntarily terminated workers was 31
percent.
“With the unemployment rate close to 10 percent, more Americans
have to turn to COBRA as a way to access health insurance,
especially for workers who are involuntarily terminated and either
don’t have a new job right away, or don’t have a job with an
employer-provided health plan,” said Karen Frost, Hewitt’s Health
and Welfare Outsourcing leader. “However, enrollment rates will
likely decline over time, as workers can’t—or aren’t willing
to—afford the high premiums associated with COBRA coverage.
Additionally, workers who enrolled in June anticipating the subsidy
would be extended may subsequently drop coverage now that it is
clear they won’t be able to off-set the high cost of COBRA.”
Under the COBRA law, terminated workers may continue
employer-sponsored health coverage by paying 100 percent of the
health care premium plus an additional 2 percent to cover
administrative costs. This translates to roughly $8,800 a year in
COBRA health care costs for the average worker. Enacted in March
2009, the COBRA subsidy under the American Recovery and
Reinvestment Act of 2009 (ARRA) required eligible employees to pay
only 35 percent of the COBRA premium, or about $3,000 a year for
the average worker. The subsidy lasts for up to 15 months for
workers who were involuntarily terminated between September 1, 2008
and May 31, 2010.
About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations
around the world with expert human resources consulting and
outsourcing solutions to help them anticipate and solve their most
complex benefits, talent, and related financial challenges. Hewitt
works with companies to design, implement, communicate, and
administer a wide range of human resources, retirement, investment
management, health care, compensation, and talent management
strategies. With a history of exceptional client service since
1940, Hewitt has offices in more than 30 countries and employs
approximately 23,000 associates who are helping make the world a
better place to work. For more information, please visit
www.hewitt.com.
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