Administrative Hassles from COBRA Subsidy Limited
Usefulness
October 16, 2009 (PLANSPONSOR.com) - Ceridian
Benefits Services said the new COBRA subsidy enacted by the
U.S. government may have been able to help greater numbers of
displaced workers afford health care if it required fewer
compliance, paperwork, and recordkeeping responsibilities
from employers.
The COBRA Subsidy Law, passed last February as part of
the American Recovery and Reinvestment Act of 2009 (ARRA),
provides a 65% subsidy for workers involuntarily terminated
since September 1, 2008. Eligibility for the subsidy ends
on December 31, 2009.
Ceridian analyzed data from more than 50,000 employer
clients representing 7.3 million employees and found COBRA
enrollments increased from 12.4% pre-ARRA (during the
period from September 2008 to February 2009) to 17.7%
post-ARRA (during the period from March 2009 to June 2009).
That is an increase of approximately 40% from pre-ARRA
rates, but lower than anticipated by many legislators,
Ceridian said.
The report lists several possible reasons for the low
COBRA enrollment rate, including tight deadlines to
implement the mandate, the additional accounting burdens
presented by the subsidy, and the difficulty of tracking
eligibility to only those involuntarily terminated. "Our
data shows that the COBRA enrollment rate under ARRA is
less than anticipated and that the unique challenges the
law presents to employers may have discouraged
participation," said Colleen O'Reilly, Ceridian's chief
author of the report, in a press release.
Ceridian also noted that less than 1% of employers took
advantage of a lower-premium/lower-coverage COBRA option
allowed by the new law, so the high cost of premiums even
with the subsidy could have kept enrollment down.
The report was presented by the American Benefits
Council to members of the U.S. Department of the Treasury.
Policymakers are seeking employer reaction to the
possibility of extending or expanding the subsidy, Ceridian
said.
The report is
here
.
Rebecca Moore
editors@plansponsor.com