What is a subsidy in Cobra?
Asked by: Jamey Dooley | Last update: June 27, 2025Score: 4.4/5 (7 votes)
What is a subsidy in health insurance?
State. Subsidy description. California. Individuals with household incomes up to 250% of the federal poverty level (FPL) are eligible for CSRs that eliminate deductibles and reduce other out-of-pocket costs. For 2025, all Covered California enrollees will qualify for at least the Enhanced Silver 73 health plan5.
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 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 the COBRA subsidy taxable to the employee?
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.
COBRA Subsidy: Who’s Eligible, How it’s Funded, and How to Deliver Notices to Employees
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.
Who pays for COBRA after termination?
COBRA and Cal-COBRA
COBRA allows former employees, retirees, and their dependents to temporarily keep their health coverage. If you get COBRA, you must pay for the entire premium, including any portion that your employer may have paid in the past.
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.
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 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.
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.
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.
How long can you stay on COBRA?
You can stay on COBRA for 18 or 36 Months
COBRA coverage generally lasts 18 months for the employee. However, dependents on the plan, such as a spouse or children, can be eligible for up to 36 months of coverage under certain circumstances, like divorce or the death of the covered employee.
Is subsidy good or bad?
Most economists consider a subsidy a failure if it fails to improve the overall economy. However, policymakers might still consider it a success if it helps achieve a different objective. Most subsidies are long-term failures in the economic sense but still achieve cultural or political goals.
What does it mean to claim a subsidy?
A "subsidy" is the extra amount of wages an employer pays an impaired individual for services over the reasonable value of the actual services performed. We deduct the value of subsidies from earnings when we make an SGA decision.
What is the purpose of a subsidy?
Subsidies are payments, tax breaks, or other forms of economic support given by governments to certain industries or economic sectors. The goal of subsidies is to aid or support what are deemed to be key parts of the economy or national infrastructure.
Is COBRA subsidized?
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 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 to my deductible if I go on COBRA?
Your Insurance Deductible Will Rollover When COBRA Insurance Is Elected.
How much does COBRA typically cost per month?
COBRA coverage is not cheap.
A COBRA premium can cost on average $400 to $700 a month per person.
What happens if I elect COBRA but don't pay?
There is no grace period if you're late paying your initial COBRA premium payment. 3 If it isn't paid on time (ie, within 45 days of electing COBRA), you lose your right to have COBRA coverage; you'll have to find other health insurance options or you'll be uninsured.
Is COBRA 18 months or 36 months?
In that case, COBRA lasts for eighteen months. If the qualifying event is the death of the covered employee, divorce or legal separation of the covered employee from the covered employee's spouse, or the covered employee becoming entitled to Medicare, COBRA for the spouse or dependent child lasts for 36 months.
What is the COBRA loophole?
If you decide to enroll in COBRA health insurance, your coverage will be retroactive, meaning it will apply to any medical bills incurred during the 60-day decision period. This loophole can save you money by avoiding premium payments unless you actually need care during this time.
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.
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.