Enrolment has doubled since government began offering subsidy
With unemployment in the United States at a 25-year-high, 14 million people are now eligible for a federal program that extends their employer-sponsored health benefit coverage. And since the introduction of a government subsidy, enrolment in the program has doubled, according to consulting firm Hewitt Associates.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows fired and laid off workers to keep their employers' health insurance for 18 months. But the program's costs are often prohibitive.
Participants must pay 100 per cent of the insurance premium plus two per cent for administrative costs. The program costs the average worker about $8,000 a year.
But enrolment in the program has doubled since February when the government began paying 65 per cent of the premium for eligible workers. The unemployed workers are then left paying just $3,000 in premiums, according to Hewitt.
In the six months before the subsidy, only 19 per cent of those eligible for COBRA signed up for the program. From March to June, enrolment rates in COBRA averaged 38 per cent.
The average worker with employer-sponsored health insurance pays about 22 per cent of the premium cost, or about $1,900, according to Hewitt.
"The average American may still find it difficult to pay for this benefit when they have less income coming in, which is perhaps why enrolment numbers didn't jump higher," said Karen Frost, Hewitt's health and welfare outsourcing leader.
"It's possible these laid off workers are simply seeking coverage with a new employer or through their spouse's employer. Unfortunately, it's also likely that some are just foregoing health insurance altogether."
