How to Extend a COBRA Subsidy

COBRA subsidies make it more affordable.

COBRA allows former employees to retain health benefits for up to 18 months, which prevents jobless workers from losing health insurance. Although a useful benefit, COBRA can be quite costly. Given that many jobs during the economic collapse of the last few years, Congress established COBRA subsidies as part of the American Recovery and Reinvestment Act. Initially, through ARRA, Congress granted subsidies for 35 percent of COBRA premiums for up to nine months. They later amended the provision to extend the premium reduction for a full 15 months.

Things You'll Need

• COBRA election information
• Employer separation date

Instructions

1. 

   Make sure to elect COBRA coverage.

   Verify your COBRA election by reviewing the general election information provided by your prior employer's benefits administrator. It is necessary to have elected COBRA coverage within 60 days of receiving the election information to obtain a subsidized premium and subsequent extension.

2. Review any separation papers provided by your previous employer, and ensure your separation date falls between September 1, 2008 through May 31, 2010. Receiving the COBRA premium subsidy is automatic, and you should verify you qualify in order to avoid overpaying or underpaying the premium.

3. 

   Assistance with COBRA subsidies is available.

   Call or contact online a benefits adviser for assistance. Because COBRA subsidy extensions are automatic, this last step is not always necessary. However, if there are issues or questions you cannot resolve, the United States Department of Labor provides benefits advisers to help (see References).

Tips & Warnings

• According to the United States Department of Labor, COBRA premium subsidy extensions are automatic, and you do not even need to wait for a notice from your health plan's administrator to continue paying the reduced premium.

• Although the COBRA premium reduction provides an enormous benefit for jobless workers, some may qualify for a different benefit they may find more useful. The IRS offers a health coverage tax credit that covers 80 percent of health premiums, but this benefit is restricted to those ages 55 to 65.

References

• United States Department of Labor: FAQs on COBRA Premium Reduction Extension Provisions
• IRS.gov: COBRA Health Insurance Continuation Premium Subsidy
• United State Department of Labor: FAQs for Employees About COBRA Continuation Health Coverage