65% COBRA Premium Subsidy
Included in the 2009 Economic Stimulus Package (ARRA) was a provision for subsidized COBRA premiums for individuals who have lost their jobs. The subsidy pays the cost of 65% of COBRA premiums while the individual picks up the remaining 35% rather than the usual 100%. The subsidy is provided directly to the employer who still pays 100% of the insurance premium. The covered individual then pays 35% of the premium to the prior employer and the employer submits for the 65% premium subsidy directly to the government as a payroll tax credit. The subsidy is provided for 9 months at which time the individual can elect other coverage or continue under COBRA for 9 more months paying 100% of the premium. The subsidy applies to anyone involuntarily terminated from employment between September 1, 2008 through December 31, 2009. Even if you turned down COBRA coverage initially, you may still be eligible. Because the provision was enacted late, employers have to provide eligible individuals with a second chance to enroll in COBRA. The premium subsidy is not retroactive but individual will be eligible for the 65% subsidy for the full 9 months starting from the time they elect coverage. To be eligible the individual can not be eligible to participate in another group plan through an employer or a spouse's employer. There are also phase-outs for high income couples when AGI exceeds $250,000 ($125,000 Single). For tips on improving efficiency and reducing risk, signup for the Controlzkit newsletter here.