Survey: COBRA costs increased for unemployed in 2009
A new survey of 1,079 employers nationwide found an increase in monthly COBRA contributions for terminated employees.
According to the Aon Corporation's 2010 Benefits Survey, the average monthly cost for employee-only HMO coverage for a terminated worker is $429 this year, compared to $399 for the same coverage in 2009.
For employee plus family, the former employee is paying $1,251 a month this year, compared to $1,171 last year. For PPO coverage, the average monthly cost for an employee only is $449 in 2010, compared to $439 in 2009, and for employee plus family, the cost tops out at a monthly average of $1,310 this year, versus $1,275 last year.
"The increased frequency and duration of COBRA use is creating a significant strain on the program, leading to higher costs," said John Zern, executive vice president and health and benefits practice director for the global benefits and human capital consulting business.
"Those who are unemployed and facing uncertainty about employment prospects and future COBRA availability are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage. This, coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position," he said.
According to the survey, current employees can expect to shoulder more of the expense related to health coverage in 2011. Nearly two thirds (65 percent) of employers plan to increase cost-sharing next year for deductibles, co-pays and out-of-pocket maximums.
About 57 percent of the companies that responded to the survey say they will ask employees to contribute more for the overall cost of healthcare in 2011, but the amount varies. On plan design (e.g., deductibles, co-pays and out-of-pocket maximums), 46 percent of employers are shifting costs to employees equal to the overall renewal increase, while an additional 46 percent are shifting costs to workers that are less than the overall renewal increase.
For overall health plan cost, 40 percent of employers say the additional worker contributions will be equal to the 2011 renewal increase, and 49 percent indicate that workers will be asked to pay less than next year's renewal increase.
"We believe the new health reform law will increase healthcare costs by 2 percent to 4 percent during the next three years," said Tom Lerche, senior vice president with Aon Consulting. "In addition, we expect to see new costs related to excise taxes and potential cost shifting from reductions in Medicare reimbursement to providers, which will be on top of existing long-term medical trend inflation. These factors will lead many employers to consider increased employee contributions for health coverage, as well as plan design cost sharing."