COBRA enrollment doubles with subsidy, study says
Laid-off workers have been flocking in recent months to COBRA, the federal program that has long allowed them to keep their employers' health insurance for 18 months -- but for a hefty price.
Lots of people have become eligible for the program -- with unemployment at a 25-year high -- but few are able to afford it when they lose their income. COBRA allows involuntarily terminated to pay 100 percent of the premium plus 2 percent for administrative costs. The cost: roughly $8,800 a year for the average worker.
The doubling of COBRA enrollment has been since February, when the government began paying a subsidy to make the coverage actually affordable to some unemployed people, according to an analysis by Hewitt Associates, a human resources consulting firm.
According to Hewitt's data, eligible workers receive a nine-month subsidy that leaves them responsible for paying only 35 percent of their COBRA premium -- about $3,300 a year. The firm says that, on average, workers with employer-sponsored health coverage pay 22 percent of the premium cost, about $1,900 a year. The company's data was culled from enrollment activity for 200 large U.S. companies representing eight million employees.
In the six months before the subsidy, Hewitt says, only 19 percent of those eligible for COBRA signed up for it; that was up to 38 percent from March to June. Some of those who lose their health insurance when they lose their jobs end up covered by a spouse's employer or by a new employer. But many are likely foregoing health insurance altogether.
COBRA usage varies by industry and those hardest hit by layoffs -- manufacturing, construction, leisure and retail -- have seen their rates spike the most since the temporary subsidy was introduced.
Categories: General Health, Health care reform
