A new analysis by Hewitt Associates, a global human resources consulting and outsourcing company, shows that many workers are continuing to enroll in COBRA for health care insurance, despite the high price tag and the end of the government COBRA subsidy. One out of five terminated employees in Hewitt’s analysis enrolled in COBRA coverage in June 2010—the first month where the subsidy was not available—which is almost twice as high as historical, pre-subsidy enrollment rates.
Hewitt analyzed COBRA enrollment rates for workers who were voluntarily or involuntarily terminated from their jobs since 2004. This analysis of 200 large U.S. companies, representing 8 million employees, shows that the average COBRA enrollment rate for these employees and their dependents was 21 percent in June 2010. This is significantly higher than the historical monthly average enrollment rate (12 percent) but slightly lower than overall enrollment rates during the period that the COBRA subsidy was available to involuntarily terminated employees (25 percent).
When looking only at the subset of workers who were involuntarily terminated and eligible for the COBRA subsidy, Hewitt’s analysis showed the average monthly enrollment rate was 38 percent, with enrollments peaking in June 2009 at 46 percent. For May 2010—the last month that the subsidy was available—the COBRA enrollment rate for involuntarily terminated workers was 31 percent.
“With the unemployment rate close to 10 percent, more Americans have to turn to COBRA as a way to access health insurance, especially for workers who are involuntarily terminated and either don’t have a new job right away, or don’t have a job with an employer-provided health plan,” said Karen Frost, Hewitt’s Health and Welfare Outsourcing leader. “However, enrollment rates will likely decline over time, as workers can’t—or aren’t willing to—afford the high premiums associated with COBRA coverage. Additionally, workers who enrolled in June anticipating the subsidy would be extended may subsequently drop coverage now that it is clear they won’t be able to off-set the high cost of COBRA.”