EBRI Notes

‘Income of the Elderly Population Age 65 and Over, 2008,’ and ‘Examination of the Short-term Impact of the COBRA Premium Subsidy and Characteristics of the COBRA Population’

Jun 3, 2010 16  pages


Income of the Elderly Population Age 65 and Over, 2008

WHERE RETIREES GET THEIR INCOME: This article reviews the latest available data on the older population's income (from the U.S. Census Bureau’s March 2009 Current Population Survey) and how it has changed over time, as well as how the elderly's reliance on these sources varies across demographic characteristics.

SOCIAL SECURITY THE DOMINANT SOURCE: In 2008, Social Security was the largest source of income for those currently age 65 and older, accounting for 39.8 percent of their income on average. Pension and annuities income was 19.7 percent, income from assets 13.0 percent, and income from earnings was 25.6 percent. Nearly all individuals (89.2 percent ) age 65 and over were receiving income from Social Security in 2008, while 55.3 percent received income from assets, 35.4 percent received income from pensions and annuities, and 20.4 percent received income from earnings.

MEDIAN INCOME LEVELS: Real median income of the elderly (the midpoint, 50 percent above and 50 percent below) reached $18,001 in 2008, the highest point in the Census Bureau time series.

Examination of the Short-term Impact of the COBRA Premium Subsidy and Characteristics of the COBRA Population

THE SUBSIDY: On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5), which included a provision for the federal government to pay 65 percent of the premiums for individuals covered under the continuation of employment-based health insurance by COBRA who incurred an involuntary job loss between Sept. 1, 2008, and Dec. 31, 2009. The subsidy was made available for up to nine months, and has been extended by Congress three times. At this writing it now lasts 15 months, having been extended through May 2010, and eligibility has been expanded to individuals who first became eligible for COBRA due to a reduction in work hours and then experienced an involuntary employment termination between March 2, 2010, and March 31, 2010.

LITTLE EFFECT SO FAR: Current data indicate that the COBRA subsidies that became available in April 2009 do not appear to have had an immediate impact on the percentage of individuals with coverage through a former employer, but it is too early to tell from nationally representative surveys if and when take-up of COBRA accelerated. Data through August 2009 (and limited data through November 2009) are expected to be available in September 2010, when it will be possible to examine the impact that the premium subsidy has had on take-up of COBRA.