How does ARPA COBRA subsidy work?
Asked by: Dr. Verona Gerhold II | Last update: November 3, 2025Score: 4.1/5 (72 votes)
How do I claim my COBRA subsidy credit?
Request a Refund for Amounts Paid in COBRA Premiums Exceeding Federal Employment Tax Liability: The employer may claim the Credit through an employment tax refund on the applicable employment tax return, generally Form 941, Employer's Quarterly Federal Tax Return.
What are ARPA subsidies?
Temporary subsidies were originally passed as part of the American Rescue Plan Act (ARPA) in 2021, which included two years of enhanced subsidies (2021 and 2022). The Inflation Reduction Act (IRA), which passed in 2022, extended these enhanced subsidies for an additional three years, ending after 2025.
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 long does the COBRA subsidy last?
The subsidy is available for 9 months of coverage. The subsidy does not change or extend the overall COBRA continuation coverage, which is usually 18 months from the qualifying event.
ARPA - COBRA Subsidy - What you need to know
How does 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.
Is COBRA subsidy ending a qualifying event?
No, stopping payment for COBRA coverage is not considered a qualifying event. Once you choose COBRA, that's your health insurance until another plan has been made available.
Is COBRA coverage 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 is the 105 day COBRA loophole?
So, if you maxed out the 60 day election period plus the 45 day payment period, you could actually go 105 days without paying for the coverage.
How long can you get a COBRA after you quit your job?
COBRA coverage lets you pay to stay on your job-based health insurance for a limited time after your job ends (usually 18 months). You usually pay the full premium yourself, plus a small administrative fee.
How does ARPA funding work?
State governments and the District of Columbia will receive $195.3 billion of the state portion of the recovery funds over two tranche disbursements. Territories will receive a total of $4.5 billion in a single payment. Recipients must obligate the funds by Dec. 31, 2024, and spend them by Dec.
What is ARPA Cobra?
The American Rescue Plan Act of 2021 (ARPA) includes a federally-financed COBRA subsidy that is available for up to six months for eligible individuals. ARPA was signed into law on March 11, 2021. The law provides for COBRA health insurance premium assistance for individuals who meet certain requirements.
What can be purchased with ARPA funds?
Eligible uses of these funds include:
Premium pay for essential workers, Investments in water, sewer, and broadband infrastructure.
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.
Can I get a refund from COBRA?
Generally, there are no refunds when you cancel your plan early. You may contact your administrator or your past employer for specific insurance payment information.
Can you write off COBRA payments on your 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.
What is the 60 day loophole for COBRA?
What is the COBRA Loophole 60 Days? The Cobra Loophole 60 Days allows you to defer your decision about COBRA insurance until the very last day of the 60-day period. This gives you a window of time where you don't need to pay any premiums, yet you're still covered if an emergency occurs.
What is the 14 day rule for COBRA?
14-Day Notice Period
The HR office must provide the COBRA Election Notice and Election Form to qualified beneficiaries within 14 days from the date of the qualifying event or loss of coverage, or when the HR office is notified, whichever comes first.
Will COBRA pay retroactively?
COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.
Is it better to get COBRA or obamacare?
Both COBRA and ACA Marketplace plans have their advantages. COBRA lets you keep your exact employer-based plan but is often more expensive. ACA plans may be more affordable, especially with subsidies, but require choosing a new plan. The best choice depends on your financial situation and healthcare needs.
What are the disadvantages of COBRA coverage?
- COBRA can be expensive, especially compared to the premiums you were paying before your qualifying event. ...
- COBRA does not apply to all employer-sponsored health plans—in particular, those organizations with fewer than 20 employees may have no requirements. ...
- Even if you get an extension, COBRA is only temporary.
How much does COBRA cost for one month?
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. Your recent employer's monthly insurance contribution.
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.
How to get COBRA for 36 months?
Second Qualifying Event - If you are receiving an 18-month maximum period of continuation coverage, you may become entitled to an 18-month extension (giving a total maximum period of 36 months of continuation coverage) if you experience a second qualifying event that is the death of a covered employee, the divorce or ...
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.