LINCOLNSHIRE, Ill. — A new analysis from Hewitt Associates, a global human resources consulting and outsourcing company, indicates that average monthly enrollment rates in COBRA health care plans among subsidy-eligible employees have increased by 20 percentage points since the COBRA subsidy was enacted in March 2009. This comes as President Obama recently signed the Department of Defense Appropriations Act for Fiscal Year 2010, which includes a law that lengthens the duration of the COBRA subsidy from nine months to 15 months for eligible employees and their dependents. It also extends the subsidy to those Americans who lose their jobs on or before February 28, 2010.

Hewitt's analysis 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 percent, compared to 19 percent for the period of September 2008 to February 2009—prior to when the subsidy was enacted.

"The increase we've seen in COBRA enrollments since March highlights how important the subsidy benefit has been to families who have been affected by the high rate of unemployment," said Karen Frost, Hewitt's Health and Welfare Outsourcing leader. "The subsidy provides laid-off Americans with a cost-effective way to continue getting health insurance coverage, and we expect enrollment rates to remain high until the subsidy expires or the labor market shows signs of improving."

The COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA) requires eligible employees to pay 35 percent of the COBRA premium, or about $3,000 a year for the average worker. Under the original COBRA law, most involuntarily terminated workers were required to pay 100 percent of the health care premium plus an additional 2 percent to cover administrative costs. This translates to roughly $8,800 a year in COBRA health care costs for the average worker.

COBRA Enrollments by Industry
Since the subsidy was enacted in March 2009, Hewitt's analysis shows that companies in the industrial manufacturing and aerospace and defense industries saw the largest overall increases in COBRA enrollment rates for subsidy-eligible employees. In the industrial manufacturing industry, for example, COBRA enrollment rates for eligible employees rose from 7 percent (September 2008 to February 2009) to 67 percent (March 2009 to November 2009). In addition, companies in the aerospace and defense industry saw the rate of COBRA enrollments more than double, from 30 percent (September 2008 to February 2009) to 63 percent (March 2009 to November 2009).

Industry Breakdown of Average Monthly COBRA Enrollment Rates

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit www.hewitt.com.

Maurissa Kanter

,  Hewitt Associates,  (847) 883-1000

MacKenzie Lucas

,  Hewitt Associates,  (847) 883-1000