COBRA Participation Doubles After ARRA

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Published September 2009

With the highest level of unemployment in the United States in 25 years, increasing numbers of Americans are turning to Consolidated Omnibus Budget Reconciliation Act (COBRA) for health care coverage during these trying times. The American Recovery and Reinvestment Act of 2009 was signed into effect in February and brought with it a government subsidy for COBRA which Americans who recently lost their jobs can take advantage of. Research shows that on average premiums for COBRA dropped from about $1000 to $377 per month for recipients of the subsidy, making health coverage much more affordable for participating members. This decrease in premium costs caused a marked increase in COBRA enrollments.

In a study of 200 large U.S. companies which covered 8 million employees conducted from March 2009 to June 2009, Hewitt Associates Inc. found that COBRA enrollments doubled to 38% for eligible Americans. This figure is up from just 19% for the previous period of September 2008 through February 2009. At BASIC, we also saw the COBRA electives with our client double. COBRA enrollments in the industrial manufacturing industry jumped 800% since the subsidy became available; original enrollment was just 7% and rose to 59% in the four months following the subsidy. The increase in enrollment is attributed mostly to the COBRA subsidy lowering costs for eligible recipients and it is likely this trend will continue throughout 2009.

One common misconception with the COBRA subsidy is that recipients will no longer receive the subsidy after December 31, 2009. This date is simply the latest date in which a person could have the qualifying event and still be eligible for the COBRA subsidy. The COBRA subsidy can still be paid for an eligible recipient through much of 2010; it is available for up to nine months after a qualifying event. In addition to this, Congress is discussing the possibility of extending the latest date that a worker can experience a qualifying event and still be eligible for the subsidy.