1. What is the Federal COBRA subsidy?

ARPA’s COBRA subsidy requires the federal government to provide “assistance eligible individuals” (AEI) with a 100% subsidy for premiums (including the administrative fee) otherwise owed for COBRA coverage during the period from April 1, 2021 to September 30, 2021 (subsidy period).

ELIGIBILITY FOR THE SUBSIDY

2. Who is eligible for the subsidy? Am I an Assistance Eligible Individual (AEI)?

Assistance Eligible individuals (AEI) are eligible for the subsidy. An AEI is a qualified beneficiary who during the period of COBRA coverage of April 1, 2021 – September 30, 2021 (1) experiences a qualifying event consisting of an involuntary termination of employment (other than due to gross misconduct) or reduction of hours, or experienced such a qualifying event prior to April 1, 2021, as long as the associated COBRA coverage period overlaps with the April 1 – September 30 subsidy period, (2) is not otherwise eligible for Medicare or other group health plan coverage, and (3) who actually elects COBRA coverage. Please note there are some additional considerations below:

3. Are my family members eligible for the subsidy?

An AEI includes both employees/former employees and their dependents covered under a health plan (a covered spouse and/or dependent child(ren) who become qualified beneficiaries at the time of the COBRA qualifying event).

4. Is a domestic partner eligible for the subsidy?

No, domestic partners are not eligible for the subsidy. Any additional cost in premiums paid on behalf of a domestic partner will not be eligible for the subsidy and must be paid by the COBRA member.

5. If I have a qualifying event that is a birth or adoption, is my new child eligible for the subsidy?

If you have a birth or adoption at any time after you were involuntarily terminated or your hours reduced, your new family member will be eligible for the subsidy because they are considered qualified beneficiaries. Any increase in premiums for this event will be eligible for the subsidy.

6. What does it mean to be involuntarily terminated?

Generally, an involuntary termination of employment is the independent exercise of the employer to terminate employment where the employee was willing and able to continue to work. The following events are considered to be an involuntary termination:

Involuntary terminations of employment include the following reasons:

  • Termination after an absence from work due to illness or disability
  • An employee-initiated for good reason due to a material negative change in the employment relationship for the employee
  • Employee-initiated termination where an employee accepts a severance agreement during a window of time due to expected terminations of employment
  • Failure to renew an employment contract. If the contract was for specific services over a set term and would not be renewed, this would not be considered an involuntary termination.
  • Employee-initiated termination of employment because of a material change in the geographic location of employment for the employee
  • Employee-initiated termination of employment after an involuntary reduction of hours that did not result in a loss of health coverage
  • Termination for cause
7. What is not an involuntary termination?

The following events are NOT considered an involuntary termination:

  • Employee-initiated terminations of employment
  • Death – any spouse or dependents covered under the health plans on the date of death are not eligible for the COBRA subsidy. They are eligible for COBRA, however.
  • Employee-initiated termination of employment including the following reasons:
    • Concerns about workplace safety due to a health condition of the employee or a family member of the employee
    • A child unable to attend school or a childcare facility is closed due to COVID-19
  • Termination for gross misconduct
  • Retirement
8. What does it mean to have a reduction in hours?

According to the DOL and IRS FAQs, reduction of hours includes the following scenarios if the employee remains employed at the time the hours are reduced:

  • Change in a business’s hours of operations,
  • Change from full-time to part-time status,
  • Taking of a temporary leave of absence,
  • Furlough – a temporary loss of employment or complete reduction of hours with an expectation to return to work, or
  • An individual’s participation in a lawful labor strike
9. What does it mean to be eligible for another group health plan or Medicare?

Being eligible means that you must be able to enroll in the major medical benefits. If you can enroll in Medicare now, you are not eligible for the subsidy, even for COBRA benefits that you currently are not participating in under Medicare.  For example, if you are eligible for Medicare (age 65 or older), you are not eligible to enroll in the subsidy for dental and vision and other COBRA benefits. You may enroll in COBRA, but you will have to pay the premiums. If you are eligible to enroll in a spouse’s or new employer’s major medical plan now, you are not eligible for the subsidy. For example, if you are eligible for major medical on your spouse’s plan, you are not eligible to enroll in the COBRA subsidy for dental, vision and other COBRA benefits. You may enroll in COBRA, but you will have to pay the premiums. Note that if you are eligible for dental/vision plans (or other plans that are not major medical) under your spouse’s or new employer’s plan, you may enroll in COBRA for major medical or other COBRA benefits.  You should check with your new employer’s or spouse’s human resources department or Medicare to determine if you are able to enroll in these health plans now. If you are, you are not eligible for the subsidy. If you were previously eligible for Medicare or another group health plan but have missed the enrollment opportunity, you may be eligible for the COBRA subsidy until the time you may enroll in group health coverage or Medicare.

10. What if I am not eligible for the subsidy because I am eligible for Medicare or another group health plan, can I still enroll in COBRA?

Yes, if you were involuntarily terminated or had a reduction in hours but you are not eligible for the subsidy because you are eligible for other coverage, you may still enroll in COBRA effective April 1, 2021 or later, or retroactively to your original qualifying event date. You may enroll in benefits you were eligible for when you were involuntarily terminated or had a reduction in hours and loss coverage. You will need to pay the premiums because you are not eligible for the subsidy..

11. What if I am eligible to enroll in another group health plan or Medicare, but I decline to enroll?

If you are eligible to enroll in other group health coverage or Medicare but you decline the coverage, you are no longer eligible for the subsidy effective on the first day you are eligible to enroll.

12. I was eligible for COBRA last year but now have a new job offering health insurance. Am I eligible for the subsidy?

No. Any individual who has access to coverage via another group health plan is not eligible for the subsidy. Even if you are not currently enrolled in the group health plan, you do have coverage available to you and therefore, you are not eligible for the COBRA subsidy.

13. What if I must wait to be eligible for a new employer’s group health plan?

If you are an AEI and there is a waiting period to be eligible for your new employer’s group health plan, you may be eligible for the subsidy up through the effective date of your employer’s health coverage. For example, assume your new employer allows you to enroll in coverage on the first day of the month following 2 months of service. If you are an AEI, you will be eligible for the subsidy until the first day of the month immediately following the end of the waiting period. If you decline coverage in your new employer’s group health plan, you are not eligible for the subsidy.

15. If I am eligible for Medicare or enrolled in Medicare, am I eligible for the subsidy?

No. Because you are eligible for (or enrolled in) Medicare, you are not eligible for the COBRA subsidy.

16. Is COBRA coverage considered coverage under another group health plan?

Typically, an AEI with coverage under another group health plan is not eligible for the subsidy.  However, for purposes of the subsidy, COBRA continuation coverage is not considered other group health coverage that disqualifies an AEI for the subsidy. If your spouse or dependent was involuntarily terminated or had a reduction in hours in their former employer benefit plans and lost coverage, they are AEIs in those plans and can obtain the subsidy in those plans. If your spouse or dependent is a qualified beneficiary and an AEI in your former employer’s benefit plans, they are eligible for the subsidy unless they are eligible under another group health plan or Medicare. COBRA coverage does not disqualify them for the subsidy.

Example – you and your spouse are AEIs and had dental and vision coverage when you were involuntarily terminated or had a reduction in hours and lost coverage. Your spouse has COBRA coverage for major medical in his or her former employer’s benefit plans. Your spouse can enroll in dental/vision plans under your former employer’s plans and be eligible for the subsidy. The COBRA coverage does not disqualify your spouse from the subsidy for the dental and vision plans. If he or she is an employee and has active employee major medical coverage, the dental/vision premiums are not eligible for the subsidy under your COBRA plans because your spouse is considered having “other group health coverage”.

17. What happens if I am eligible for the COBRA subsidy and I later become eligible for a group health plan or Medicare?

You are eligible for the subsidy until the effective date you can enroll in the other group health plan or Medicare, even if you do not enroll. You must notify TRI-AD or your employer/former employer when you are eligible for the other coverage by completing a form. There is a penalty if you fail to notify TRI-AD or your employer/former employer. See question #38 below.

18. Am I eligible to elect COBRA and the subsidy if I am enrolled in a Health Insurance Exchange?

Yes. If you were involuntarily terminated or had a reduction in hours and are currently enrolled in a Health Insurance Exchange, you may be eligible to enroll in COBRA and the subsidy. However, if you enroll in COBRA, you are not eligible for the premium tax credit to help pay for the cost of the Exchange coverage during any month that you are enrolled in COBRA continuation coverage. If you have advanced payments of the premium credit (APTC), you may have to repay the APTC for the overlap months. One way to avoid having to repay the APTC is to enroll in COBRA prospectively after the premium credits have expired.  For example, if you have APTC for April and May of 2021, you may enroll in COBRA and the subsidy effective June 1, 2021 and not have to repay the APTC. . If you wish to remain on the Exchange for major Medical, you can still enroll in other COBRA benefits such as dental and vision, if you were participating in these benefits as of your involuntary termination or reduction of hours.

19. What is the impact of a second qualifying event or disability event on the subsidy?

Generally, second qualifying events include divorce or legal separation, child aging out, death, or Medicare extended COBRA coverage. These second qualifying events extend the period of COBRA coverage from 18 months to 36 months.  If an individual becomes disabled and meets certain requirements, this individual can extend their COBRA coverage period to 29 months. If these events occur after an involuntary termination or reduction in hours of the employee/former employee, these individuals are eligible for the subsidy if these individuals have remained on COBRA coverage since their event.

  • Example A – an employee was involuntarily terminated, and the spouse was covered under the plan at the time of the termination. If they later divorce, the ex-spouse is a qualified beneficiary and is eligible for the subsidy if the ex-spouse has remained on COBRA and has paid the premiums.
  • Example B – an employee was involuntarily terminated, and a dependent child was covered under the plan at the time of the termination. If the dependent later ages out of the plan, the dependent is a qualified beneficiary and is eligible for the subsidy if the dependent child remained on COBRA and has paid their premiums.
20. Does the subsidy also apply to individuals who only started on COBRA because they lost health coverage due to a divorce or due to a dependent aging out?

No. The subsidy is not applicable to a Qualified Beneficiary who is on COBRA due to a divorce or dependent age limit qualifying event. To be eligible for the subsidy, the COBRA qualifying event must be an involuntary termination or a reduction in hours. If the first event that caused the loss of coverage was an involuntary termination or a reduction in hours and then the divorce occurred or the dependent aged out, then the ex-spouse or over-age dependent will be subsidy eligible.

21. If I never elected COBRA or stopped paying for COBRA coverage, am I eligible for the subsidy?

There is a special election opportunity for AEIs who were previously eligible for COBRA, due to the above specified qualifying events, and either did not enroll or enrolled but stopped making their COBRA premium payments and whose maximum COBRA coverage period overlaps with the subsidy period of April 1, 2021 – September 30, 2021.

This special election period begins 60 days after the newly required subsidy notice is provided, as described below.

If you newly elect COBRA coverage during the special election period, you are entitled to the COBRA subsidy on a prospective basis beginning April 1, 2021 or later, without having to elect and pay for COBRA coverage retroactively for any months prior to the subsidy period.

ENROLLMENT IN THE SUBSIDY AND SUBSIDY EFFECTIVE DATE

22. When am I eligible for the subsidy?

The subsidy is effective for COBRA coverage periods beginning April 1, 2021 – September 30, 2021.

24. How do I enroll in the subsidy?

If you are an Assistance Eligible Individual (AEI), you will be sent information on how to enroll in the subsidy. You will have 60 days from the notice date to enroll in COBRA and/or the subsidy. If you miss the deadline, you will not be eligible to enroll in the subsidy, however, you may have a right to still enroll in COBRA, but you will have to pay the full premiums.

25. If I am eligible for the subsidy and want to enroll now for coverage but have not received the notice in the mail, what should I do?

If you did not receive a notice from TRI-AD, your employer/former employer has determined that you were not involuntarily terminated or did not have a reduction in hours. You may appeal the determination by completing an appeals form located at: TRIAD COBRA ARPA Appeal Form and returning it to TRI-AD.

26. If I never enrolled in COBRA or enrolled and then stopped my COBRA coverage, when may I enroll in COBRA and the subsidy?

Due to the pandemic, the Department of Labor (DOL) and IRS extended the deadline to enroll in COBRA and make payments if the deadline was on or after March 1, 2020. The deadline to enroll or make payments is the earlier of 1 year from the original enrollment or payment deadline or the end of the Outbreak Period.  If you are allowed this additional extension of time, you may enroll in COBRA and the subsidy now. You may elect to enroll in COBRA on the following dates: 1) retroactive to the original date you lost coverage due to an involuntarily termination or reduction of hours, 2) April 1, 2021, or 3) a prospective date if it does not go past the 60-day deadline to enroll in the subsidy.

Example – assume you were involuntarily terminated and lost coverage on November 1, 2020 but did not enroll in COBRA, and a subsidy notice was mailed to you on May 31, 2021.  You must enroll in COBRA and the subsidy no later than July 30, 2021. You may enroll in COBRA effective November 1, 2020, April 1, 2021, or July 1, 2021. If you enroll effective November 1, 2020, you must pay premiums from November 1, 2020 through March 31, 2021 because these months are not eligible for the subsidy.

27. Will I later be able to elect COBRA coverage back to my original qualifying event date if I elect COBRA and the subsidy effective on or after April 1, 2021?

No. According to the IRS, you will lose the deadline extensions discussed in question #26 above to retroactively elect COBRA back to your original qualifying event date if you elect COBRA and the subsidy effective on or after April 1, 2021 and decline the retroactive COBRA coverage.

Example A – this is the same example as in question #26.  Assume you were involuntarily terminated and lost coverage on November 1, 2020 but did not enroll in COBRA, and a subsidy notice was mailed to you on May 31, 2021. You must enroll in COBRA and the subsidy no later than July 30, 2021.  You may enroll in COBRA effective November 1, 2020, April 1, 2021, or July 1, 2021. If you enroll effective November 1, 2020, you must pay premiums from November 1, 2020 through March 31, 2021 because these months are not eligible for the subsidy. After July 30, 2021, if you elect COBRA and the subsidy effective April 1, 2021, you will no longer have the right to retroactively elect COBRA back to November 1, 2020, so the extended deadlines no longer apply.

28. What if I am an AEI and lose coverage in August or September 2021? Am I still eligible for the subsidy even if I elect COBRA after September 30, 2021?

If you are an AEI and entitled to COBRA coverage at any time before September 30, 2021, you are eligible for the subsidy, even if you enroll in COBRA and the subsidy after September 30, 2021.

FORMER EMPLOYER PAYING COBRA PREMIUMS

29. What if my former employer is paying for all or a portion of my COBRA premiums, am I still eligible for the subsidy for the portion I must pay?

If you are an AIE, are not eligible for other group health coverage or Medicare, and your former employer is paying for all or a portion of your COBRA premium during April 1, 2021 – September 30, 2021, any portion of the premium you are required to pay is eligible for the subsidy.

Example A – if you pay 25% of the COBRA premium and your former employer pays 75%, the government subsidy will be 25% of the premium that you are required to pay so in this example, you pay nothing.

Example B – your former employer pays 100% of the subsidy for three months starting April – June 2021, and then you are responsible to pay 100% of the premiums starting in July 2021.  In this situation, the subsidy will apply to you July 1, 2021 – September 30, 2021.

Employers may vary on how they will handle these cost-sharing arrangements so you may receive additional information from your former employer on their COBRA payments.

BENEFITS ELIGIBLE FOR THE SUBSIDY

30. What benefits are eligible for the subsidy?

All COBRA-eligible benefits an AEI was covered under as of time of their involuntary termination or reduction of hours are eligible for the subsidy, except for a health flexible spending account. This includes medical, dental, vision, EAP, etc.

31. If I am on COBRA and added a benefit during an open enrollment period offered by the employer/former employer, is the newly added benefit eligible for the subsidy?

Yes, if you are an assistance eligible individual, benefits added during an open enrollment period are eligible for the subsidy.

32. If I am on COBRA and added family members during an open enrollment period, are the premiums I pay for these family members eligible for the subsidy?

Maybe. Only family members who were covered under the group health plans on the day before you were involuntarily terminated or your hours were reduced are eligible for the subsidy. These family members are considered “qualified beneficiaries.”  Family members that are not qualified beneficiaries and added later during an open enrollment are not qualified beneficiaries and are not subsidy eligible.  If family members are not qualified beneficiaries and there is a difference in the insurance premiums due to these added family members, the additional cost is not eligible for the subsidy, so you will need to pay for the difference.

33. Can I add family members effective April 1, 2021 if they were not on my group health plan when I was involuntarily terminated or had a reduction in hours and lost coverage?

No. This is not an open enrollment period for other family members who are not AEIs. In other words, family members not on your group health plan when you were involuntarily terminated or your hours were reduced are not eligible for the subsidy and are not AEIs. You cannot enroll these family members now. However, if your employer/former employer has an open enrollment between April 1, 2021 and September 30, 2021, you may add them during the open enrollment period, but they will not be eligible for the subsidy.

34. I previously elected self-only COBRA coverage effective April 1, 2021. If I add qualified beneficiaries who are eligible for the subsidy (AEIs), can I change to family coverage?

Because this is an enrollment event for the AEIs, you will be able to change to a different coverage tier in your health plans. For example, if you elected self-only coverage and will add a spouse and dependents who are AEIs effective April 1, 2021, you can switch to family coverage or the appropriate tier for the health plan.

SUBSIDY DURATION

35. How long does the subsidy last?

The subsidy lasts for 6 months, April 1, 2021 – September 30, 2021.  If you lose health coverage after April 1, 2021, the subsidy will be shorter and end on September 30, 2021.

37. As an AIE, can I lose the subsidy earlier than the 6-month subsidy period?

Possibly. AEIs lose the subsidy earlier than September 30, 2021 under the following circumstances:

  • Your COBRA coverage expires at the end of 18 months of COBRA coverage (or 29 months for disability or 36 months for second qualifying events)
  • You are or become eligible for:
    • other group health plan coverage (other than a health FSA, an excepted benefit such as a dental or vision plan, or a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)); or
    • Medicare

Eligibility for another group health plan or Medicare means eligible to enroll, even if you do not enroll.

38. What happens if I fail to notify TRI-AD or my employer (former employer) of my eligibility for another group health plan or Medicare?

A penalty applies if you fail to notify TRI-AD (or your employer) of your eligibility for other plans unless the failure is due to reasonable cause and not willful neglect.  The penalty amount is $250 for each failure and if the failure was intentional, the penalty will increase to the greater of $250 or 110% of the subsidy paid after your subsidy eligibility terminated.

REFUNDS OF PREMIUMS PAID DURING APRIL – JUNE

39. I am currently on COBRA, should I keep paying my premiums or will the subsidy pay now?

If you are a current COBRA participant and paying your monthly premiums, please continue to pay your premiums to ensure your coverage is not terminated. TRI-AD is currently working to finalize our processes and approach to support and administer the subsidy. The subsidy is effective April 1, 2021- September 30, 2021 and any payments made to TRI-AD for this period will be refunded to you if you are eligible for the subsidy.

40. When will I receive a refund of any amount(s) I paid that were eligible for the subsidy?

Once you enroll in COBRA and the subsidy, if you paid for any COBRA premiums for coverage on or after April 2021, you will be refunded these amounts as soon as the refunds can be processed. This should typically be no later than 60 days after your last payment.

41. Will any extended State continuation coverage be eligible for the subsidy?

If an AEI has coverage under a fully insured health plan and they can continue State COBRA coverage after Federal COBRA has ended, that coverage is eligible for the subsidy. For example, in California under a fully insured medical plan, an AEI may continue coverage on CAL-COBRA and be eligible for the subsidy between 4/1 – 9/30. However, if the AEI didn’t sign up for CAL-COBRA (or any extended state COBRA continuation coverage), they do not get to elect it now. In other words, there is no special election for an AEI to elect state continuation coverage to get the subsidy.

ADDITIONAL INFORMATION

42. Where can I find more information about the COBRA subsidy?

The US Department of Labor (DOL) has developed FAQs for the COBRA subsidy.  Click this link https://www.dol.gov/ to access their FAQs.

Internal Revenue Service Notice 2021-31: https://www.irs.gov/pub/irs-drop/n-21-31.pdf

Please check back here regularly as we will update this page as we receive new information and guidance.