02.25.10
Another COBRA Subsidy Extension Likely
As the most current deadline for the COBRA subsidy draws near, there is yet another push to extend benefits for involuntarily terminated employees. There are a variety of different proposals being discussed among the administration and congress. Between the continued high unemployment rate and huge public pressure, some form of extension appears likely.
Although provisions of the extension are not certain, the 15-month subsidy will likely be extended to workers laid off from March 1 through May 31, 2010. In addition, there is talk of extending the subsidy to workers whose hours were reduced, causing them to lose group health coverage, then subsequently laid off. The exact details of this provision are still being worked out.
The current 65% subsidy of insurance premiums has been a huge success to millions of laid-off workers and their families. Opt-in rates have risen dramatically since the subsidy began a year ago. From September 2008 through February 2009, an average of 19% of involuntarily terminated employees opted for COBRA. From March through November 2009, that average more than doubled to 39%.
Unfortunately for employers and administrators, any extension invariably will add another wave of problems. Beneficiaries will have to be notified and invoicing will need to be revised to reflect whatever changes are made. But more than administrative issues, another extension will boost employers’ costs, though definitive statistics are not yet available. This is especially true for employers who have laid off large numbers of employees.
From Business Insurance, February 8, 2010 issue, pp. 1 and 20, and February 15, 2010 issue, pp. 1 and 21.