Date: January 11, 2010
For more information contact: Jim Guidry, (608) 264-6239 or jim.guidry@wisconsin.gov
Insurance Commissioner Dilweg Issues
Emergency Rule on COBRA Subsidy Extension
Madison, WI—Wisconsin Insurance Commissioner Sean Dilweg announced an emergency rule that will enable former employees of Wisconsin small employers to take advantage of the extension of a popular federal health insurance premium subsidy.
The federal American Recovery and Reinvestment Act of 2009 (ARRA) was recently amended to extend both the eligibility period and the duration of the ARRA premium subsidy benefit for terminated employees who select continuation benefits through their former employer, generally referred to as COBRA continuation.
"The extension of this program is good news," said Dilweg. "Congress and President Obama continue to provide help for people still struggling with recession and unemployment."
The emergency rule extends the ARRA amendments to health benefit plans that are not covered under federal law, generally employers with fewer than 20 employees.
Under the American Recovery and Reinvestment Act of 2009, the federal government subsidizes COBRA coverage for many workers who were involuntarily terminated on or after September 1, 2008, through December, 31, 2009. The subsidy under ARRA requires eligible employees to pay 35% of the COBRA premium with the federal government providing a subsidy for the remaining premium.
The federal extension of the ARRA subsidy was included in the Department of Defense Appropriations Act for Fiscal Year 2010. The extension increased the duration of the COBRA subsidy from 9 months to 15 months for eligible employees and their dependents and extends eligibility for the subsidy to those who lose their jobs on or before February 28, 2010.
A recent analysis by Hewitt Associates found that enrollment in COBRA continuation increased by 20% among subsidy-eligible employees. Hewitt examined the COBRA enrollment activity for 200 large U.S. companies representing 8 million employees from March 2009 to November 2009. During that period, monthly COBRA enrollment rates for subsidy-eligible employees averaged 39%, compared to 19% for the period of September 2008 to February 2009—before the subsidy was enacted.
"This study confirms what we've heard from consumers that have contacted OCI," said Dilweg. "It shows how important health insurance is and that affordability is one of the primary barriers to obtaining health coverage. The ARRAsubsidy makes premiums more affordable for families who continue to experience financial stress from job loss."
OCI has also issued a bulletin to Wisconsin licensed health insurers informing them about the changes and the emergency rule.
Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.