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| JULY 2010 |
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Treasury Department Report - COBRA Subsidy Widely Used
by Middle Class According to a recent Treasury Department survey, federal subsidies of health insurance premiums for the unemployed were widely used by the middle class during the recession. Many laid-off workers and their families maintained their health coverage as a result of the subsidy. The American Recovery and Reinvestment Act of 2009 (ARRA) established a tax credit that paid 65 percent of the cost of health insurance premiums for eligible unemployed workers and their family members who maintained their health coverage through the federal COBRA continuing coverage program. Usually, individuals on COBRA coverage are required to pay up to 102% of the total cost of premiums. The Treasury Department estimates that for a typical family nationwide, the ARRA subsidy reduced the cost of COBRA from about $13,500 to $4,725. The Treasury analysis is one of the earliest reports on the profile of unemployed individuals who obtained continuing health insurance coverage through the ARRA COBRA subsidy. The study surveyed more than 6,000 New Jersey workers receiving Unemployment Insurance in the fall and winter of 2009. The report found that between one-quarter and one-third of eligible unemployed workers enrolled in subsidized COBRA. In addition, roughly 15% of Unemployment Insurance beneficiaries received health insurance coverage through COBRA. The report concludes that the subsidy appears to have been especially important for maintaining health coverage for middle-class families during the recession, and likely reduced the number of Americans who otherwise would have gone uninsured during the recession. A separate publication from the Treasury Department estimates that up to 2 million households were provided premium assistance in 2009, and over 300,000 claims were filed by employer tax reporting units through early 2010. The Treasury Department suggests that the availability of the program may have significantly slowed the growth of the uninsured population, which had been significantly increasing through Feb. 2009. To view the Treasury Department report, please click here.
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