Aug 23

Written by: Besselman and Little
8/23/2011 2:13 PM 

A popular government program that subsidized COBRA health insurance premiums for millions of laid-off employees will end this month.  Under the COBRA premium subsidy program, which was included as part of a huge economic stimulus bill Congress passed in February 2009 during the peak of the recession, the federal government pays 65% of COBRA premiums for involuntarily terminated employees.

Since then, Congress several times extended the program in which premium subsidies are provided to laid-off employees for up to 15 months.  The last extension in April 2010 extended the subsidy to those let go through May 31, 2010.  For employees who were laid off in May 2010 and have been unemployed since, their 15 months of COBRA premium subsidies will expire at the end of August. 

The exact number of individuals who took the subsidy isn't known.  At the time the original subsidy legislation was passed, congressional analysts estimated that the subsidy would aid more than 7 million laid-off employees and their families and cost the government about $25 billion.

The subsidy had a dramatic effect on COBRA enrollment.  A study conducted last year by Hewitt Associates found that the COBRA take-up rate among terminated employees working for large employers roughly doubled after the subsidy was available.

Keep in mind that by the end of August, employers should no longer be paying the subsidy for any terminated employee.  If the employee remains on COBRA, he or she will begin to pay 100% of the premium.

Besselman & Little Agency would be happy to answer any questions you may have regarding the COBRA subsidy.  Give us a call at 225-767-0334, or email us at info@besselmanlittle.com.