With layoffs on the rise in a rapidly shifting economic landscape, many Employers discuss severance packages which often include health insurance subsidies. Subsidized health insurance premiums for COBRA continuation, or “Cobra-like” coverage, may seem straightforward, but require careful planning and must operate in compliance with Federal and State laws. In this article, we glance at some “hot tips” for the most commonly asked questions relating to COBRA premium subsidies.

Subsidizing COBRA Premiums As Part of Severance Package
While it is not required by law, employers may offer former employees subsidized premiums, covering all or a percentage of the monthly COBRA or continuation coverage premium rate. Subsidized premiums may be offered for specified time-periods, such as one month all the way up to the full eligibility time-period of a COBRA continuation qualified beneficiary (usually 18 months).

See Update from 04/13/2023
In 2021, the IRS and DOL released guidance about the National State of Emergency, due to the COVID-19 pandemic, on employer-qualified beneficiaries.  Part of the emergency relief was the requirement for plans subject to ERISA or the Internal Revenue Code to disregard the “Outbreak Period” for typical COBRA employer beneficiaries' time-frames such as:

• The 60-day election period for COBRA continuation coverage
• The due date for COBRA premium payments
• The deadline for employers to notify individuals of their COBRA Notice of Right to Elect
• The 30-day (or 60-day) Special Election Period to request enrollment into a group health plan
• The timeframes for filing claims
• The deadlines for requesting appeals for adverse benefit determinations.

Notice 2021-31 includes an overview of the premium subsidy, as well as 86 new Frequently Asked Questions and Answers on this trending benefits topic of the year. 

The premium assistance COBRA subsidy of 2021 comes with a multitude of employer responsibility from notifications, to benefits changes, to subsidized COBRA premiums. Further, the subsidy for covered employers, brings new payroll tax reporting responsibilities, in order for employers to receive the Federal tax credit on COBRA continuation coverage premiums that are being subsidized for the six month period ending September 30, 2021.

A year after the onset of the Coronavirus pandemic, The American Rescue Plan Act (ARPA) established the second ever COBRA premium subsidy for continuation coverage....

​As detailed in a previous article, President Biden signed into law the American Rescue Act (ARPA) on March 11th. 

Updated 03/15/2021. This information based on guidance provided by government agencies as of March 15th. Updates may follow. 

Back in April of 2020, the U.S. Department of Labor, in conjunction with the Department of Treasury and the IRS, issued a Joint Final Rule that went into effect as March 1, 2020 – which was declared the start of the National Emergency due to the COVID-19 pandemic. ​

USERRA is The Uniformed Services Employment and Reemployment Rights Act that has some differences from that of COBRA benefits. 

On Tuesday, November 10th the US Supreme Court heard oral arguments on the legality of the Affordable Care Act (ACA) in the case California v. Texas. ​