Benefits and Compensation

DOL Survey to Analyze COBRA Premium Subsidy Up-take

To fill in the knowledge gaps on how many individuals enrolled in the COBRA premium subsidy program — data that will be helpful in determining the program’s cost-effectiveness, who best benefited from the subsidy and how to target similar programs — the U.S. Department of Labor (DOL) plans to sponsor a study sometime in 2012.

However, before taking that step, for administrative reasons DOL must first solicit comments from the public concerning this “data collection.” Accordingly, DOL  is scheduled to publish in the Dec. 12 Federal Register a notice on the “Proposed Information Collection Request (ICR) for the Impact of the American Recovery and Reinvestment Act (ARRA) COBRA Subsidy survey.”

An advance copy of the notice generally describes COBRA’s continuation coverage provisions — most key the fact that the law allows employers to charge COBRA qualified beneficiaries the full premium, plus a 2-percent administrative fee. It further explains that the ARRA premium subsidy provision “was intended to help make COBRA coverage more affordable to involuntarily unemployed workers.”

Generally, the subsidy law provided that an “assistance-eligible individual” (AEI) was entitled to receive a 65-percent subsidy for continuation coverage premiums for up to 15 months. An AEI was any qualified beneficiary who elected COBRA and state-continuation coverage and: (1) had a qualifying event of involuntary termination of employment (other than by reason of gross misconduct) between Sept. 1, 2008, and May 31, 2010; or (2) had a reduction in hours of employment between those dates and was involuntarily terminated between March 2, 2010 and May 31, 2010.

Because “little is known about the number and characteristics of workers and dependents who are eligible for COBRA coverage or about the workers that used the subsidy to continue coverage,” DOL’s Chief Evaluation Office (CEO)  in the Office of the Assistant Secretary for Policy “is seeking to fill this knowledge gap” through the survey. Specifically, according to the notice, the CEO will be looking for a “reliable estimate” of: (1) the share of the eligible population that enrolled in ARRA-subsidized COBRA coverage; (2) the number of dependents who enrolled; (3) the duration of ARRA-subsidized enrollment; and (4) how the outcomes of workers would have differed without the subsidy.

“By sponsoring this study, CEO also offers the opportunity to better understand what factors drive COBRA enrollment, and to learn about differences in the experiences of those who were eligible for the subsidy and those ineligible for the subsidy,” the notice states.

The study will be conducted by Mathematica, which — using administrative claims data and a one-time survey of unemployment insurance recipients who became unemployed between Feb. 17, 2009 and March 31, 2011, across 20 states — will address the following questions:

  • What are the characteristics of COBRA- and subsidy-eligible individuals? The goals here include gaining both a “picture” of the individuals who have the potential to benefit from the subsidy, and information on how programs similar to the subsidy could be targeted more efficiently.
  • What are the characteristics of COBRA enrollees? Such data will help identify the most important predictors of take-up and whether COBRA and the subsidy are benefitting the intended recipients. “Identifying characteristics that are correlated to take-up may also provide suggestive evidence on why individuals chose to enroll or not to enroll in COBRA, and how these compare with individuals’ self-reported reasons for their choices,” the notice indicates. “Such analyses may provide information that could help policymakers adjust program elements to increase take-up rates.”
  • What is the impact of the subsidy on COBRA take-up and other outcomes? Such data is to help policymakers get a sense of whether the subsidy had the intended effects on COBRA coverage and related “outcomes of interest,” and whether the subsidies had similar effects on various groups of workers or benefited some groups more than others. “These types of estimates may be particularly useful in evaluating the cost-effectiveness of the subsidy,” according to the notice.

Among other things, the ICR will solicit the public’s input on the administrative impact of this proposed collection of information on the agency and the respondents. The public will have 60 days from the publication date to submit comments.

Comments are to be sent to Celeste Richie, U.S. Department of Labor, Chief Evaluation Office, Office of the Assistant Secretary for Policy, 200 Constitution Ave., N.W., Frances Perkins Bldg., Room S-2316, Washington, D.C. 20210, (202) 693-5076 (not a toll-free number). The e-mail address is richie.celeste@dol.gov and the fax number is (202) 693-5960.

UPDATE: The Federal Register notice can be found here.

More information on the premium subsidy program can be found in Mandated Health Benefits — The COBRA Guide.