Recent changes to the government program known as COBRA that's designed to help the unemployed retain health insurance have many employers afraid of increased costs, the Associated Press reports.
As part of the stimulus package passed earlier this year, the federal government added a subsidy to the COBRA program that allows someone who has lost their job to pay only 35 percent of the COBRA premium. The remaining 65 percent is covered by the former employee, who is then reimbursed by the federal government through a payroll tax credit. Self-insured employers who cover the cost of employees' medical claims themselves worry that this will lead to higher payments as more people join COBRA and make claims. Typically, self-insured employers spend more on medical claims than they receive through COBRA payments. They're afraid that if the subsidy encourages more COBRA enrollment, they will only end up losing more money.
Proponents of the subsidy counter that the it will encourage more healthy people to enroll, thus spreading out the risk and lowering the cost to employers above what they receive in premiums.
Even employers who use third-party insurers complain about the administrative headaches involved with implementing the new subsidy, though.