President Obama signed HR 3326, 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 Feb. 28, 2010.
The COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA) requires eligible employees to pay 35% 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% of the health care premium plus an additional 2% to cover administrative costs.
An increasing number of employees likely will take advantage of this extension. 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.
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%, compared to 19% for the period of September 2008 to February 2009—prior to when the subsidy was enacted.
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