Ceridian: Subsidy's Complexities May Have Limited COBRA Enrollment

Ceridian Benefits Services, the nation's largest administrator of COBRA services, said the new COBRA subsidy enacted by the U.S. government may have been able to help greater numbers of displaced workers afford health care if it required fewer compliance, paperwork and recordkeeping responsibilities from employers.

The finding is part of a Ceridian report presented earlier this week by the American Benefits Council to members of the U.S. Department of the Treasury. Policymakers are seeking employer reaction to the possibility of extending or expanding the subsidy.

Ceridian's report is available by clicking here.

The COBRA Subsidy Law, passed last February as part of the American Recovery Reinvestment Act of 2009 (ARRA), provides a 65 percent subsidy for workers involuntarily terminated since September 1, 2008. Eligibility for the subsidy ends on December 31, 2009.

"Our data shows that the COBRA enrollment rate under ARRA is less than anticipated and that the unique challenges the law presents to employers may have discouraged participation," said Colleen O'Reilly, Ceridian's chief author of the report.

Ceridian, a leading provider of managed human resource, employee benefits administration, tax filing and payroll outsourcing solutions, analyzed data from more than 50,000 employer clients representing 7.3 million employees. It found COBRA enrollments increased approximately 40 percent from pre-ARRA rates. About 18 percent of eligible workers chose COBRA health care continuation coverage, up from about 12 percent. With the recent economic climate and large numbers of layoffs, this increase was lower than anticipated by many legislators.

The report lists several possible reasons for the low COBRA enrollment rate, including tight deadlines to implement the mandate, the additional accounting burdens presented by the subsidy, and the difficulty of tracking eligibility to only those involuntarily terminated.

"Keeping complexity to a minimum, or providing policy consistent with existing COBRA rules, would have simplified processes considerably, saved resources and potentially increased participation," O'Reilly said.

About Ceridian

Ceridian is a global business services organization that offers a comprehensive range of innovative solutions. From human resources and benefits to accredited employee assistance, work-life and health and productivity services, Ceridian helps organizations maximize their human, financial and technology resources. As a leader in payroll outsourcing, gift cards and controlled spending, Ceridian is also a driving force in payment innovation. Whether partnering to improve employee productivity, save money or minimize financial risks, Ceridian's business is to help organizations stay focused on their business. For more information about Ceridian's comprehensive array of human resource solutions, visit www.ceridian.com or call 800-729-7655.

SOURCE: Ceridian

Ceridian 
Joe Brown, 727-395-8952 
joe.brown@ceridian.com

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