Do You Qualify for the COBRA Health Insurance Subsidy?

If you were involuntarily terminated from you employment between September 1, 2008 and December 31, 2009 and your employer is covered under the COBRA rules, you may qualify for the subsidy.

The American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009, includes a federally-funded COBRA continuation subsidy of 65%, which lasts up to nine months for workers (and their families) involuntarily terminated between September 1, 2008 and December 31, 2009.

Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35% of the cost of COBRA coverage. Employers must make up the difference, but are entitled to a credit for the other 65% of the COBRA cost on their payroll tax return.

COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. COBRA generally covers health plans maintained by private-sector employers with 20 or more full and part-time employees.  It also covers employee organizations or federal, state or local governments.  It does not apply to churches and certain religious organizations.  The new COBRA subsidy provisions also apply to insurers required to offer continuation coverage under state law similar to the federal COBRA.

This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns.  Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.

If you think you may qualify, you should contact your former employer.  Employers are supposed to notify former employees about this benefit no later than April 18, 2009.

---