(ii) In “time-based COBRA subsidy” of the former employee’s healthcare premium, the employer agrees to pay for the entire healthcare premium for a period of time, as for example, six months.
COBRA: Keeping Health Insurance After Leaving Your Job Disclaimer: The American Cancer Society does not offer legal advice.
... on your 2019 federal tax … [These numbers are based on the 2019 federal poverty guidelines in the continental US. In this example, the “percentage” COBRA subsidy would commonly be on that same 45% percentage basis. a) The COBRA subsidy solution for a fully insured plan: For fully insured plans, there is no issue with offering to subsidize COBRA for some or all of the maximum coverage period. Given the high cost, only about 20% of those eligible for COBRA coverage enroll. Maintaining COBRA coverage (at a higher cost than Marketplace coverage) until other employer-sponsored coverage becomes available or the next Marketplace annual enrollment could be the individual’s only option for avoiding a gap in coverage and tax penalties. Offer the terminating employee COBRA. Home > Affordable Care Act > Loss of COBRA Subsidies – A Marketplace Conundrum.
In some cases, COBRA might be the best option, despite the potentially high cost of the premiums. While this subsidy was helpful, for many it is expiring soon (it only lasts for 15 months) and you must decide whether to stick with the COBRA plan (and pay the full premium) or move on to another option. In addition, when the employer does agree to pay for all or part of the cost of COBRA coverage, they should be clear (such as in the former employee’s severance agreement) that the obligation to pay is subject to the employee’s timely election of, and eligibility for, COBRA coverage. Your employer should notify you or your dependents of the COBRA option within 30 days of your last day or if you become eligible for Medicare. Employees who select COBRA must pay the entire premium including the portion previously paid by their employer, plus a 2% administrative fee. The U.S. Department of Labor Web site provides a model notice for employers and plans to advise individuals of their right to the subsidized COBRA continuation coverage. Before sharing sensitive information, make sure you’re on a federal government site. Instead of COBRA, see if you qualify to buy a health plan through the Washington Healthplanfinder (www.wahealthplanfinder.org) and receive a subsidy to help pay your insurance premiums. A premium subsidy would improve take-up of COBRA coverage. (AGI is the figure on line 37 of your Form 1040.) While helping employers craft severance packages, we have often cautioned that a well-meaning offer by an employer to subsidize a former employee’s COBRA coverage for a period of time can result in … The COBRA health insurance program allows an individual to retain the coverage of employer-offered insurance in the event of job loss. But to take advantage of the subsidy, you’ll have to forgo your COBRA coverage and enroll in an Obamacare plan through the health insurance exchange during your 60-day special enrollment period. In addition, the COBRA subsidy is available to people who become eligible for COBRA coverage as a result of a reduction in hours occurring between Sept. 1, 2008, and May 31, 2010, followed by an involuntary termination between March 2, 2010 and May 31, 2010. As of mid-2019, 87 percent of people who were enrolled in coverage through the exchanges were receiving premium subsidies, and on average, the subsidies paid nearly 87 percent of the total premiums (for those eligible for subsidies, the average subsidy amount was $513/month, compared with an average pre-subsidy cost of $593/month). Modified adjusted gross income for the purpose of calculating the recapture of COBRA premium assistance is defined as the adjusted gross income shown on your tax return for the year with the following tax exclusions added back: foreign earned income and income from Guam, American Samoa, Northern Mariana Islands, and …
If you think your total 2019 household AGI will be within the limits, you may be eligible for a subsidy. This is still permitted (and fairly common) because the ACA’s fully insured nondiscrimination rules have not been issued yet and therefore are not effective. In 2019, employer-sponsored health coverage averaged $7,188 for an employee and $20,576 for a family.