The number of laid-off workers using the federal subsidy for affordable health insurance has doubled since the program was revised in February, according to an analysis by a human resources company.
With the U.S. unemployment rate its highest in more than 25 years, more than 14 million workers are now eligible for the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA), according to Hewitt & Associates.
Hewitt examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees. From March to June, monthly COBRA enrollment rates for Americans eligible for the subsidy averaged 38 percent, up from 19 percent from September 2008 through February 2009.
Previously, COBRA required idled workers to pay the full cost of the health care premium plus 2 percent to cover administrative costs.
That worked out to roughly $8,800 a year in COBRA health care costs for the average worker, Hewitt said.
With the modification, eligible workers receive a nine-month subsidy that leaves them responsible for paying only 35 percent of the COBRA premium, or about $3,000 a year. Hewitt research shows that on average, workers with employer-sponsored health coverage pay 22 percent of the premium cost, or $1,900 a year.
“The average American may still find it difficult to pay for this benefit when they have less income coming in, which is perhaps why enrollment numbers didn’t jump higher,” said Karen Frost, Hewitt’s Health and Welfare Outsourcing leader. “It’s possible these laid off workers are simply seeking coverage with a new employer or through their spouse’s employer. Unfortunately, it’s also likely that some are just foregoing health insurance altogether.”
According to Hewitt’s research, industrial manufacturers saw an 800 percent increase in COBRA enrollments since the subsidy was enacted. COBRA enrollments rose from 7 percent (September 2008 to February 2009) to 59 percent (March 2009 to June 2009). Enrollments for companies in the construction, leisure, and retail industries tripled.
