Spencer's Benefits Reports COBRA Survey Finds Recession Takes Hold: More Were Eligible, Fewer Signed Up, Costs...(benefits with an estimated 4.8 million i...),Health

Date:6/10/2009

benefits, with an estimated 4.8 million individuals annually receiving coverage to which they may not otherwise have access," he said. "This puts it in the same league as two sources of public health insurance for the nonelderly: individuals under age 65 covered by Medicare and people under age 65 covered by the military's CHAMPUS/VA programs. It's also provided the bridge in the insurance gap for individuals who want to take early retirement and enabled job mobility to employees who may otherwise not move to a more desirable job for fear of losing health insurance."

Looking Ahead

The American Recovery and Reinvestment Act of 2009 provides for premium reductions and additional election opportunities for health benefits under COBRA in cases of involuntary termination. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009, and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period.

The survey notes, however, that based on the reported costs, the average COBRA premium with the subsidy (35 percent of $10,988) still would be $320.50 per month, or $3,845.80 per year. Unemployment figures for the first part of 2009 suggest that eligibility for COBRA will remain high. Whether a 65-percent premium reduction will boost the take-up rate remains to be seen.

About the Survey and Spencer's Benefits Reports

The Spencer's Benefits Reports 2009 COBRA Survey, conducted via the Internet and e-mail, represents the responses of 120 organizations with more than 1.6 million employees across the United States. Spencer's Benefits Rep
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SOURCE Wolters Kluwer Law & Business Copyright©2009 PR Newswire. All rights reserved

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