How do I claim my COBRA subsidy credit?
Asked by: Herta Gulgowski | Last update: July 9, 2025Score: 4.5/5 (75 votes)
How does the COBRA subsidy work?
An individual is eligible for the COBRA subsidy if they experience either of the following qualifying events: An involuntary termination of employment (other than for gross misconduct). Reduction in hours, which causes an individual to lose state health, dental or vision plan eligibility.
How do I claim COBRA on my taxes?
Are my COBRA premiums deductible? Yes they are tax deductible as a medical expense. There isn't necessarily a “COBRA Tax Deduction”. You can only deduct the amount of COBRA medical expenses on your federal income tax in excess of 7.5% of your Adjusted Gross Income and then only if you itemize deductions.
Can you get a refund on COBRA insurance?
Premium payments for your COBRA health insurance continuation coverage, will coverage for a full month. Major medical plans will most often start on the first of the month and end on the last day. Generally, there are no refunds when you cancel your plan early.
How do I access my COBRA benefits?
Applying for COBRA begins with the employer who provided the health plan to notify you of your right to continuation. The employer has 30 days to notify the group health plan of the qualifying event. After that, the employer has 14 days to notify you of your COBRA right to keep your work health insurance.
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How does COBRA work when you quit your job?
Federal COBRA is a federal law that lets you keep your group health plan when your job ends or your hours are cut. Federal COBRA requires continuation coverage be offered to covered employees, their spouses, former spouses, and dependent children.
When should I receive my COBRA packet?
Your employer must mail you the COBRA information and forms within 14 days after receiving notification of the qualifying event.
What happens when COBRA subsidy ends?
You can continue on COBRA unsubsidized until your 18 months of COBRA eligibility ends. In addition, you will have the option to enroll in marketplace coverage when the subsidy ends in September. Loss of the COBRA subsidy will make you eligible for a special enrollment period (SEP) to sign up for marketplace coverage.
Is COBRA premium subsidy taxable income?
Taxability of Subsidies
The premium subsidy is not included in the individual's income. However, there is a phase-out of eligibility for the subsidy, which will increase some high-income individuals' tax liability if they receive the subsidy.
Can I get a refund for my insurance?
Your insurance company may issue a refund if your policy is canceled, and you've paid your premium in advance. Receiving an insurance refund will largely depend on why you're canceling the policy and how much of the premium you paid in advance.
What is the tax credit for COBRA?
If your coverage is from a former employer, such as COBRA or retiree coverage, you can decline the employer coverage, even if it is affordable and provides minimum value, and may be eligible for the Premium Tax Credit for your Marketplace coverage.
Do I get a tax form for COBRA?
If you had job-based health coverage. Depending on the kind of job-based coverage you had (including COBRA or retiree coverage), you may get one of these from your employer or insurance company: Form 1095-B, Health Coverage. Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
What is the 60 day loophole for cobras?
You have 60 days to enroll in COBRA once your employer-sponsored benefits end. Even if your enrollment is delayed, you will be covered by COBRA starting the day your prior coverage ended.
How much will my COBRA payment be?
As a result of these factors, your COBRA premium will typically be higher than the amount previously deducted from your paycheck. Based on plan and state, COBRA costs range from about $400 to $700 per month and are based on the following: Your previous monthly insurance contribution.
Are COBRA payments reported on W-2?
In general, each employer providing coverage will have to report the prorated cost on the employee's W-2. If the employee is terminated, the employer can also include the COBRA payment amounts paid by the employee after termination.
Is COBRA benefits worth it?
“If you're close to meeting your deductible on your current insurance plan and you have high health care costs, it may be worth it to temporarily stay on your COBRA plan,” explains Donovan. The same holds true if you're far into your employer plan's year and have already met your deductible.
What does COBRA subsidy mean?
The COBRA subsidy is available for individuals who are or become qualified beneficiaries as a result of involuntary termination of employment or a reduction in hours. This may include individuals who: become eligible for COBRA during the subsidy period.
Can you get a refund for COBRA?
COBRA is the law that requires your previous employer to offer coverage through their group health plan. You would need to contact your previous employer's COBRA Administrator (usually in the HR Department) or you may contact your provider directly to inquire about a refund for payments you've made after cancellation.
Does insurance subsidy count as income?
Either way, the subsidy is a tax credit, and is not considered income.
Can I claim COBRA payments on my taxes?
According to the Federal tax laws, your unreimbursed COBRA payments are, in fact, deductible as medical expenses on your 1040 tax return in the same way that you can deduct unreimbursed payments for legal medical services provided by physicians, surgeons, dentists, and other medical practitioners, as well as any ...
Is a COBRA subsidy taxable?
No you do not have to report the COBRA assistance as income. Under Sec. 139I, the premium assistance is excluded from an individual's gross income because the employer or other payer can receive a tax credit for providing the coverage.
What happens if I turn 65 while on COBRA?
In addition, a COBRA carrier may be able to bill you for any benefits paid by mistake when Medicare should have paid first. If you're already on COBRA when you become eligible for Medicare, you will lose your COBRA benefits and none of this applies to you.
Is losing COBRA subsidy a qualifying event?
If you've previously had health insurance but lost it, that event will fall into this category. Here are some examples of events that qualify as a loss of health insurance: Losing employer-sponsored coverage. Losing COBRA coverage.
Why is COBRA so expensive?
COBRA coverage is not cheap.
Why? Because you're now responsible for paying your portion of your health insurance: The cost your employer contributed to your premium, in addition to the 2% service fee on the cost of your insurance.
Will COBRA cover me retroactively?
COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.