Employers recently surveyed by Aon Consulting predict that health care costs will escalate as a result of the new federal COBRA subsidy.

Even though the subsidy will reimburse employers for 65% of their COBRA premiums, it paves the way for more COBRA enrollees, due to unemployment, and greater costs associated with administering the subsidy and communicating its details to employees, explains Aon. In addition to higher overall health care costs, the subsidy will lead to potentially higher-than-expected employee contribution rates for health care coverage in 2010.

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