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February 01, 2010
COBRA Enrollment Rises with Subsidy in Place

The enrollment rate for COBRA healthcare plans rose by 20 percentage points after the start of the COBRA subsidy program, according to an analysis of large employers by Hewitt Associates, a consulting firm.

The firm found that among subsidy-eligible workers, the COBRA enrollment rate grew from 19 percent during the period before the subsidy program to 39 percent during the period following the start of the program. The program began in March 2009.

The COBRA subsidy program was created by the American Recovery and Reinvestment Act of 2009 and was expanded and extended by the Department of Defense Appropriations Act for Fiscal Year 2010. Under the amended program, involuntarily terminated workers receive subsidies for 15 months of COBRA continuation coverage. The subsidies pay for 65 percent of COBRA premiums, with workers paying the other 35 percent. The subsidy applies to involuntarily terminated workers who lose their jobs on or before February 28, 2010.

Hewitt found that companies in the industrial manufacturing and aerospace and defense industries saw the largest overall increases in COBRA enrollment rates for subsidy-eligible employees. In the industrial manufacturing industry, for example, COBRA enrollment rates for eligible employees rose from 7 percent (September 2008 to February 2009) to 67 percent (March 2009 to November 2009). In addition, companies in the aerospace and defense industry saw the rate of COBRA enrollments more than double, from 30 percent (September 2008 to February 2009) to 63 percent (March 2009 to November 2009).

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