COBRA Enrollments Doubled Since Subsidy Enacted

August 18, 2009 (PLANSPONSOR.com) - A new analysis from Hewitt Associates reveals that COBRA enrollments have doubled since the U.S. government enacted a new subsidy to help pay for health insurance coverage for laid-off workers.

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%

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