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Unemployed See COBRA Costs Increase in 2010, While Current Workers Brace for More Health Care Cost Shifting in 2011, Says Aon Consulting

08/25/2010

CHICAGO, Aug 25, 2010 /PRNewswire via COMTEX/ --

As the national unemployment rate continues to hover around 10 percent, health care costs for those jobless Americans have seen a year-over-year increase, according to Aon Consulting, the global benefits and human capital consulting business of Aon Corporation (NYSE: AON).

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Aon Consulting surveyed 1,079 employers nationwide in its 2010 Benefits Survey, and found an increase in monthly COBRA* contributions for terminated employees. Specifically, the average monthly cost for employee-only HMO coverage for a terminated worker is $429 this year, compared to $399 for the same coverage in 2009. For employee plus family, the former employee is paying $1,251 a month this year, compared to $1,171 per month last year. As for PPO coverage, the average monthly cost for employee only is $449 in 2010, compared to $439 in 2009, and for employee plus family, the cost tops out at a monthly average of $1,310 this year, versus $1,275 last year. (Click on the following link to see charts on a detailed year-over-year comparison: http://aon.mediaroom.com/index.php?s=43&item=1998)

"The increased frequency and duration of COBRA use is creating a significant strain on the program, leading to higher costs," said John Zern, executive vice president and Health & Benefits Practice director with Aon Consulting. "Those who are unemployed, and facing uncertainty about employment prospects and future COBRA availability, are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage. This coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position."

As for current employees, they can expect to shoulder more of the expense related to health coverage in 2011, according to this survey. In fact, 65 percent of employers plan to increase cost sharing next year for things such as deductibles, co-pays and out-of-pocket maximums. What's more, 57 percent of companies say they will ask employees to contribute more for the overall cost of health care in 2011. The amount of cost sharing implemented by employers varies. On plan design (e.g., deductibles, co-pays and out-of-pocket maximums), 46 percent of employers are shifting costs to employees equal to the overall renewal increase, while an additional 46 percent are shifting costs to workers that are less than the overall renewal increase. For overall health plan cost, 40 percent of employers say the additional worker contributions will be equal to the 2011 renewal increase, and 49 percent indicate that workers will be asked to pay less than next year's renewal increase.

"We believe the new health reform law will increase health care costs by 2 percent to 4 percent during the next three years," said Tom Lerche, senior vice president with Aon Consulting. "In addition, we expect to see new costs related to excise taxes and potential cost shifting from reductions in Medicare reimbursement to providers, which will be on top of existing long-term medical trend inflation. These factors will lead many employers to consider increased employee contributions for health coverage, as well as plan design cost sharing."

To learn more about Aon Consulting's 2010 Benefits Survey, please visit www.aon.com/2010survey.

* COBRA - refers to the Consolidated Budget Reconciliation Act of 1985, and includes provisions for members of company health plans who have lost their coverage due to a "qualifying event" to continue coverage at the employee's expense for a period of time.

About Aon Consulting

Aon Consulting is among the top global human capital consulting firms, with more than 6,300 professionals in 229 offices worldwide. The firm works with organizations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007, 2008 and 2009. For more information on Aon Consulting, please visit http://www.aon.com/human-capital-consulting.

About Aon

Aon Corporation (NYSE: AON) is a leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008, 2009 and 2010 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007, 2008 and 2009, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007, 2008 and 2009 by the readers of Business Insurance. Visit http://www.aon.com for more information on Aon and http://www.aon.com/unitedin2010 to learn about Aon's global partnership and shirt sponsorship with Manchester United.

 Media Contact: Joe Micucci Aon Consulting Joe.Micucci@aon.com 312.381.4786 

SOURCE Aon Corporation

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