A new analysis from Hewitt Associates, a global human resources company, reveals that COBRA enrollments have doubled since the U.S. government enacted a new subsidy to make health insurance more affordable to millions of laid-off Americans.
With unemployment rates at their highest in over 25 years, more than 14 million workers are now eligible for the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA). Hewitt’s analysis examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees. From March 2009 to June 2009, monthly COBRA enrollment rates for Americans eligible for the subsidy averaged 38 percent, up from 19 percent for the period of September 2008 through February 2009.
Under the original COBRA legislation, involuntarily terminated workers were required to pay 100 percent of the health care premium plus an additional 2 percent to cover administrative costs. According to Hewitt data, this translates to roughly $8,800 a year in COBRA health care costs for the average worker. Under ARRA, eligible workers receive a nine-month subsidy that leaves them responsible for paying only 35 percent of the COBRA premium, or about $3,000 a year. Hewitt research shows that on average, workers with employer-sponsored health coverage pay 22 percent of the premium cost, or $1,900 a year.