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August 19, 2010 at 08:00 PM
The percentage of eligible departing workers who choose to pay for health coverage continuation benefits is staying high despite the expiration of a temporary federal subsidy.
The take-up rate for Consolidated (COBRA) Omnibus Budget Reconciliation Act continuation benefits now stands at 21%, up from an average take-up rate of 12% before Congress created the temporary subsidy in March 2009, according to Hewitt Associates Inc., Lincolnshire, Ill. (NYSE:HEW).
Hewitt has based those figures on an analysis of COBRA enrollment data for all workers who gave left their jobs since 2004. The database included information about 200 large U.S. employers with a total of 8 million employees.
The Senate let the COBRA subsidy expire in July.
When the subsidy program was in effect, involuntarily terminated workers paid 35% of the premiums, the federal government paid 65%, and employers and insurers covered the administrative costs.
Before the subsidy was created, any eligible worker who wanted to take up COBRA had to pay an amount equal to 102% of the cost of the premiums. The government did not distinguish between workers who left voluntarily and those who left as a result of layoffs or other involuntary terminations.
The cost of COBRA coverage is now equal to 102% of the cost of premiums for all eligible, departing employees.
