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Summary of Key COBRA Provisions
in the American Recovery and Reinvestment Act (H.R. 1)
Issue COBRA Health Care Provisions
1. Qualifying event for premium subsidy
Loss of health coverage due to involuntary loss of employment between September 1, 2008, and December 31, 2009.
Update: April 13, 2010.
Under the bill that the House already has approved, the 15-month, 65% federal premium subsidy would be extended to employees involuntarily terminated from September 1, 2008 to May 31, 2010.
This subsidy expired May 31, 2010
Last Updated 07/24/2010
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2. Amount of subsidy
Individual pays 35% of COBRA premium and 65% of premium is subsidized by employer (which the employer may then claim as a credit against wage withholdings and payroll taxes). The subsidy phases out for taxpayers with modified adjusted gross income exceeding $145,000 (or $290,000 for joint filers) and is reduced proportionately for taxpayers with adjusted gross income between $125,000 and $145,000 ($250,000 and $290,000 for joint filers).
Call toll-free (866) 577 3620 to determine your elligibility for the subsidy.
3. Duration of subsidized COBRA coverage
Maximum of 9 months subsidy for COBRA coverage (some may qualify for up to 15 months of assistance). Subsidy ends sooner if individual becomes eligible for coverage under another group health plan or Medicare. Total of 18 months of COBRA coverage is available in most cases, consistent with current law.
4. Effective date of subsidy
Subsidy effective for any premium for a period of coverage beginning on or after date of enactment. Based on the bill being signed February 17, 2009, the subsidy is effective as of March 1, 2009, for periods of coverage billed on a monthly basis. Includes a 60-day special rule for refunds or credits to COBRA beneficiaries for any premium overpayments that occur after March 1, 2009.
5. Special election period
60-day special election required for those eligible for the subsidy if they had not previously elected COBRA. Special election opportunity also applies to a qualified beneficiary who elected COBRA coverage but who is no longer enrolled on the date of enactment.
6. Option to change coverage
At the employerıs option, eligible individuals may be allowed to apply the COBRA subsidy to any health plan option offered by their employer to active employees, provided that the coverage has the same or lower premium as the individualıs continuation coverage.
7. Payroll tax credit
Employers may claim a tax credit against periodic deposits for wage withholdings and FICA payroll taxes for the portion of COBRA premium not paid by individual. If the employerıs
claims for COBRA subsidy payments exceed the amount of wage withholdings or FICA payroll taxes reported by the employer, Treasury is directed to reimburse the employer directly for the excess amount. Entities entitled to reimbursement must report
certain information to the Treasury Department, including attestations of involuntary termination for each covered employee and amounts of payroll taxes offset for the reporting period and estimated offsets for the subsequent reporting period.
8. Extended COBRA coverage for certain individuals
No such provision was included in the final bill. Under the original House of Representatives measure, individuals 55 or older or with 10 or more years of service with an employer could remain on COBRA coverage until covered under Medicare or another employer group health plan.
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