Is there a tax credit for COBRA premiums?
Asked by: Colin Christiansen | Last update: November 2, 2025Score: 4.6/5 (37 votes)
Are COBRA payments eligible for tax credit?
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 ...
What disqualifies you from the premium tax credit?
For tax years other than 2021 and 2022, if your household income on your tax return is more than 400 percent of the federal poverty line for your family size, you are not allowed a premium tax credit and will have to repay all of the advance credit payments made on behalf of you and your tax family members.
What is a COBRA premium subsidy?
The federal government initiated several programs to address the challenges posed by the coronavirus outbreak. One of these programs was the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy, which excluded qualified individuals from paying premiums for a specified duration.
Can you get a refund for COBRA?
Unfortunately, COBRA law generally does not allow for premium refunds. However, there might be exceptions depending on specific circumstances. Exploring options: Review your COBRA plan documents: Look for any clauses mentioning exceptions or refund policies related to denied claims or coverage discrepancies.
How Premium Tax Credit works (ACA Subsidies Explained) | Obamacare
Are COBRA premium reimbursements 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 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 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.
Is COBRA premium pre tax?
Employers can choose how COBRA subsidies are paid. In some circumstances, employees can pay for their COBRA premiums from their severance payments on a pre-tax basis. To do this, you should consider the following: Your Section 125 cafeteria plan must permit these pre-tax payments.
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.
Will I have to pay back my premium tax credit?
If at the end of the year you've taken more premium tax credit in advance than you're due based on your final income, you'll have to pay back the excess when you file your federal tax return. If you've taken less than you qualify for, you'll get the difference back.
Can I deduct COBRA premiums if unemployed?
Yes they are tax deductible as a medical expense.
What is the highest income to qualify for ACA?
In 2025, you'll typically be eligible for ACA subsidies if you earn between $15,060 and $60,240 as a single person. A family of four is eligible with a household income between $31,200 and $124,800.
What tax act provides a temporary reduction of COBRA premiums?
The ARP provides temporary premium assistance for COBRA continuation coverage for Assistance Eligible Individuals (see Q3 to determine if you are eligible).
Why am I not eligible for premium tax credit?
In general, individuals and families may be eligible for the Premium Tax Credit if their household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line for their family size.
Do you have a deductible with COBRA?
Your election of COBRA is a continuation of the exact same health plan you had through your employer. Because it is the same insurance policy, if you've met your deductible already, you will not have rollback to $0 out-of-pocket after you've started COBRA.
Can I get a premium tax credit for COBRA?
The same rules that apply to people who are eligible for retiree coverage apply to people who are eligible for COBRA. Like retiree coverage, an offer of COBRA does not bar someone from being eligible for a premium tax credit. It is only a barrier to receiving the credit if the person actually enrolls.
Does your deductible reset if you go on COBRA?
Because your coverage is “continued,” your deductible won't reset until the new plan year, etc.
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.
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.
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 ...
What is the average cost of COBRA insurance?
A COBRA premium can cost on average $400 to $700 a month per person.
Is COBRA cheaper than Obamacare?
COBRA costs an average of $599 per month. An Obamacare plan of similar quality costs $462 per month—but with the government subsidies available, the average cost of an Obamacare plan on HealthSherpa is less than $10 per month. But ultimately, it depends on your situation.
What is the largest disadvantage of COBRA?
Limited coverage duration:
One of the significant drawbacks of COBRA is its limited coverage duration. Typically, COBRA allows individuals to retain their employer-provided health insurance for up to 18 months after leaving their job or experiencing a qualifying event.
What is not covered under COBRA?
COBRA also does not cover plans that provide only life insurance or disability benefits, as those benefits are not considered “medical care.”