“Subsidies to help unemployed workers continue their employer-provided health insurance coverage will expire at the end of August.
The subsidy for COBRA coverage paid for 65% of premiums for the involuntarily unemployed. Part of the economic stimulus package passed in the early weeks of the Obama administration, the subsidies were to last for nine months. However, congressional extensions kept the program going through May 2010. Qualifying individuals laid off on or before the expiration date were eligible to receive the reduced premiums for up to 15 more months, according to the U.S. Department of Labor.
Those eligible for another group health plan or Medicare could not receive the payments. Subsidies were not be available to those who earn more than $125,000 a year, or $250,000 per household.
The rising number of COBRA participants in 2009 bolstered the rolls of insured Americans in a time of steep job losses, leading to utilization increases for health insurers, according to an A.M. Best Special Report. COBRA enrollees tend to have a higher medical loss ratio, typically well above 100%, based upon regular or nonsubsidized premiums. Insurers are monitoring COBRA claims and watching trends closely. Increased COBRA enrollment can negatively impact underwriting results due to the high claims experience of these individuals (BestWire, Feb. 9, 2010).
COBRA subsidies briefly lapsed in the summer of 2010. An extension was tied to legislation extending the National Flood Insurance Program, which also experienced service interruptions.
The 25-year-old Consolidated Omnibus Budget Reconciliation Act program allows employees who are terminated or leave their jobs voluntarily to remain in their former employer’s group health plan for up to 18 months, which can be extended to 36 months for those with extenuating life circumstances. Employers are permitted to charge COBRA enrollees up to 102% of the true cost of group health premiums, which average more than $1,000 per month.”