COBRA Enrollments Doubled Since Subsidy Enacted
According to a Hewitt press release, from March 2009 to June 2009, monthly COBRA enrollment rates for Americans eligible for the subsidy averaged 38%, up from 19% for the period of September 2008 through February 2009. Companies in the industrial manufacturing industry saw an 800% increase in COBRA enrollments since the subsidy was enacted – from 7% (September 2008 to February 2009) to 59% (March 2009 to June 2009). Enrollments for companies in the construction, leisure, and retail industries tripled.
Hewitt explained that under the original Consolidated Omnibus Budget Reconciliation Act (COBRA) legislation, involuntarily terminated workers were required to pay 100% of the health care premium plus an additional 2% to cover administrative costs, translating to roughly $8,800 a year in COBRA health care costs for the average worker.
Under the COBRA provision of the American Recovery and Reinvestment Act of 2009 (ARRA), eligible workers receive a nine-month subsidy that leaves them responsible for paying only 35% of the COBRA premium, or about $3,000 a year (see H.R. 1 Contains COBRA Provisions ). Hewitt research shows that on average, workers with employer-sponsored health coverage pay 22% of the premium cost, or $1,900 a year.
Hewitt says more than 14 million workers are eligible for the subsidy. Hewitt’s analysis examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees.
Industry Breakdown of COBRA Enrollments
Avg. Monthly Enrollment Sept. 2008 - Feb. 2009 | Avg. Monthly Enrollment March 2009 - June 2009 | |||
Cross Industry Average | 19% | 38% | ||
Aerospace & Defense | 30% | 71% | ||
Automotive & Transport | 25% | 52% | ||
Banking | 29% | 57% | ||
Business Services | 20% | 44% | ||
Chemicals | 9% | 20% | ||
Computer Hardware & Services | 22% | 40% | ||
Construction | 6% | 22% | ||
Consumer Products Manufacturers | 54% | 41% | ||
Electronics | 55% | 62% | ||
Energy & Utilities | 13% | 24% | ||
Financial Services | 27% | 37% | ||
Food & Beverage | 12% | 28% | ||
Health Care | 10% | 12% | ||
Industrial Manufacturing | 7% | 59% | ||
Insurance | 23% | 36% | ||
Leisure | 11% | 28% | ||
Media | 13% | 29% | ||
Pharmaceuticals | 20% | 41% | ||
Retail | 9% | 26% | ||
Telecommunications Equipment & Services | 27% | 53% | ||
Other | 5% | 17% |