From the November 2009 issue of Ceridian Connection.

According to a recent study released by Ceridian Benefits Services, the nation's largest administrator of COBRA services, the COBRA subsidy enacted by the U.S. government in February 2009 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.

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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.

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.