Swapping COBRA For Obamacare Likely To Be Windfall For Big Business

Health-law provisions taking effect next year could save U.S. employers billions of dollars in expenses now paid for workers who continue medical coverage after they leave the company, benefits experts say.

Insurance marketplaces created by the Affordable Care Act are expected to all but replace COBRA coverage in which ex-employees and dependents can remain on the company plan if they pay the premiums.

See the full story at KaiserHealthNews.org

 

Hewitt Research Continues to Show High Rate of COBRA Enrollments Among Subsidy-Eligible Employees.

A new analysis from Hewitt Associates, a global human resources consulting and outsourcing company, indicates that average monthly enrollment rates in COBRA health care plans among subsidy-eligible employees have increased by 20 percentage points since the COBRA subsidy was enacted in March 2009. This comes as President Obama recently signed the Department of Defense Appropriations Act for Fiscal Year 2010, which includes a law that lengthens the duration of the COBRA subsidy from nine months to 15 months for eligible employees and their dependents. It also extends the subsidy to those Americans who lose their jobs on or before February 28, 2010. Hewitt’s analysis examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees from March 2009 to November 2009. During that period, monthly COBRA enrollment rates for subsidy-eligible employees averaged 39 percent, compared to 19 percent for the period of September 2008 to February 2009—prior to when the subsidy was enacted.

“The increase we’ve seen in COBRA enrollments since March highlights how important the subsidy benefit has been to families who have been affected by the high rate of unemployment,” said Karen Frost, Hewitt’s Health and Welfare Outsourcing leader. “The subsidy provides laid-off Americans with a cost-effective way to continue getting health insurance coverage, and we expect enrollment rates to remain high until the subsidy expires or the labor market shows signs of improving.”

The COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA) requires eligible employees to pay 35 percent of the COBRA premium, or about $3,000 a year for the average worker. Under the original COBRA law, most involuntarily terminated workers were required to pay 100 percent of the health care premium plus an additional 2 percent to cover administrative costs. This translates to roughly $8,800 a year in COBRA health care costs for the average worker.

COBRA Enrollments by Industry

Since the subsidy was enacted in March 2009, Hewitt’s analysis shows 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).

Industry Breakdown of Average Monthly COBRA Enrollment Rates

Avg. Monthly EnrollmentSept. 2008 – Feb. 2009Avg. Monthly Enrollment Mar. 2009 – Nov. 2009
Aerospace & Defense30%63%
Automotive & Transport25%33%
Banking29%50%
Business Services20%42%
Chemicals9%19%
Computer Hardware/Services22%40%
Construction6%26%
Consumer Products54%65%
Electronics55%75%
Energy & Utilities13%22%
Financial Services27%34%
Food & Beverage12%27%
Health Care10%18%
Industrial Manufacturing7%67%
Insurance23%40%
Leisure11%28%
Media13%36%
Pharmaceuticals20%44%
Retail9%24%
Telecommunications27%44%
Other5%16%
Cross Industry Average19%39%

About Hewitt Associates

For more than 65 years, Hewitt Associates (NYSE:HEW) has provided clients with best-in-class human resources consulting and outsourcing services. Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent and change management. As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide. In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit www.hewitt.com.

Source: Hewitt Associates

COBRA Subsidy Expiration: Research Shows Similarly Priced Alternatives to Subsidized COBRA for Families in Most States.

eHealth, Inc. (NASDAQ: EHTH), the leading online source of health insurance for individuals, families and small businesses, has  released data that shows that buying non-group policy may be a better alternative for some that COBRA coverage.

According to the research, the national average for individually purchased family health insurance premiums was $383. When compared to COBRA subsidy data released by Families USA on December 1, 2009, the eHealth research shows that the average family premiums of $383 is six dollars ($6) less than the average subsidized COBRA premium of $389, and $728 less than the average unsubsidized COBRA premium of $1,111.

eHealthInsurance.com encourages consumers who have lost their COBRA subsidies to explore all of their available health insurance options by taking the following actions:

1. Be proactive about seeking a long-term alternative to COBRA by researching your health insurance options at a place like eHealthInsurance.com.

2. If you’ve never purchased your own health insurance before, get help by contacting an agent or broker or by using free online resources like eHealth’s “Health Insurance Buyer’s Guide.”

3. If you have a pre-existing medical condition, contact the Foundation for Health Coverage Education at http://www.CoverageForAll.org to determine what free and low-cost health care options are available to you in your area.

4. Calculate the amount of time you have remaining on the COBRA subsidy using eHealth’s COBRA Subsidy Calendar widget.

5. If you have medical debt or need help understanding your rights, eHealth encourages you to review Families USA’s consumer guide: Your Medical Bills: A Consumer’s Guide to Coping with Medical Debt.

About eHealth:

eHealth, Inc. (NASDAQ: EHTH) is the parent company of eHealthInsurance, the nation’s leading online source of health insurance for individuals, families and small businesses. Through the company’s website, http://www.eHealthInsurance.com, consumers can get quotes from leading health insurance carriers, compare plans side by side, and apply for and purchase health insurance. eHealthInsurance offers thousands of health plans underwritten by more than 180 of the nation’s leading health insurance companies.

Source: eHealth