COBRA Subsidy Boosts Take Up Rate, Survey Finds

The COBRA subsidy certainly has boosted the number of workers who lost their jobs in the past year and continued their former employer’s health coverage, recent surveys have shown. One-third of terminated employees chose the 65% COBRA subsidy in 2009, according to preliminary results of the 2010 COBRA Health Care Continuation of Coverage Survey being conducted by Spencer’s Benefits Reports.

The 65% subsidy in COBRA premiums is available for up to 15 months for certain "assistance eligible individuals," as originally provided by the American Recovery and Reinvestment Act of 2009.

In past Spencer surveys, as the eligibility rate rose, the COBRA election rate often dropped, as happened in 2008, just before the COBRA subsidy took effect. In preliminary figures for 2009, however, both the eligibility and election rates were high. The 33% COBRA election rate by terminated employees is significantly above the 20% average in previous Spencer COBRA surveys. In addition, 18% of employees covered by health care became eligible for COBRA in 2009, well above the 11% average in previous surveys.

These results mirror results of a recent Treasury Department survey of COBRA elections in New Jersey which suggested that one-fourth to one-third of eligible unemployed workers enrolled in subsidized COBRA for continuing health insurance.

Congress has extended the COBRA subsidy several times, and in March the Senate agreed to another extension. The House of Representatives, however, recently stripped out the COBRA extension when it passed H.R. 4213, the American Jobs and Closing Tax Loopholes Bill, and a further extension is unlikely right now.

Spencer’s Benefits Reports has been collecting and analyzing COBRA survey information since 1990. This year’s survey requests information concerning the costs, administrative procedures, and problems associated with COBRA and the COBRA subsidy initiated in 2009.

The COBRA Health Care Continuation of Coverage Survey is an important source of information for benefit plan administrators nationwide and is regularly quoted in national and government publications. It is the longest-running national COBRA survey.

Employers and plan administrators who complete the survey will receive a free copy of the results. In addition, survey participants who include a name and email address will be entered in a drawing to win one of three $100 American Express gift certificates.

To take part in Spencer’s Benefits Reports 2010 COBRA Health Care Continuation of Coverage Survey survey, visit http://www.zoomerang.com/Survey/?p=WEB22A6JEFSRSH.

For the past 65 years, Spencer’s has been a major information resource on employee benefit federal laws and regulations and trends for employee benefits professionals.