As layoffs swell the ranks of those eligible to receive benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a shrinking percentage is partaking, a new survey finds.
The Spencer's Benefits Reports 2009 COBRA, produced by New York-based Wolters Kluwer Law & Business, found that of the 16.87% of employees became eligible for COBRA in the 2008 plan year, only 9.69% of those eligible actually signed up for coverage.
"This is the highest percentage of employees becoming eligible and the lowest rate of election for COBRA coverage since Spencer's first conducted a COBRA survey in 1989, but something we might expect given the severity of current economic conditions," says Stephen Huth, managing editor, Spencer's Benefits Reports.
The survey of 120 businesses found that the high cost of COBRA to both employers and employees was the primary concern of those surveyed. "Concern with the cost of COBRA to employees hardly registered as a problem before 2002, but since then it has been at or near the top of the list," says Huth.
The survey was completed before a new subsidy for COBRA recipients kicks in. The 65% subsidy was a provision of The American Recovery and Reinvestment Act of 2009, and provides for premium reductions and additional benefits under COBRA in cases of involuntary termination.
"The 2009 survey will provide a baseline of COBRA experience at the height of a recession but before the temporary 65% COBRA subsidy in the American Recovery and Reinvestment Act took effect," Huth says.
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