Employers Gear Up for COBRA Extension

Congress agreed last month to extend the federal subsidy for COBRA benefits for workers who lose their jobs, leaving companies with the task of notifying eligible former employees. The December legislation makes assistance on health insurance premiums available to workers who are laid off through Feb. 28, versus the former cutoff of Dec. 31, 2009. It also gives eligible workers 15 months of assistance, up from the nine months provided in last February's stimulus legislation.

The COBRA subsidy has increased the number of laid-off workers who continue to get health insurance from their former employers. According to a Hewitt survey of 200 big companies, 39% of workers sign up for COBRA now that the subsidy is available, up from 19% before the subsidy.

Kaye Pestaina, vice president for national health compliance at HR consultancy Segal Co., says the challenge for employers is figuring out which former employees to tell about the extension and notifying them in a timely way. "The [Department of Labor] updated a fact sheet last week setting out some of the notice requirements, but I've received lots of questions today about who it goes to and what the content is," Pestaina says.

Beyond the administrative challenges, she says companies worry that the workers who elect COBRA will be those with more health problems, an example of adverse selection that could boost companies' healthcare costs over time. So far, though, there is no evidence that that is occurring, Pestaina says.

For a look at what companies are doing to encourage employee wellness, see Healthy Motivation.

Comments

Advertisement. Closing in 15 seconds.