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Under an expanded COBRA program, the COVID relief package by President Biden provides a temporary subsidy covering 100% of your premiums if you were laid off or had your working hours reduced during the pandemic. This coverage, which runs from April 1 to September 30, 2021, is also available to those who are already enrolled. Here’s how to qualify.
What is COBRA?
COBRA, or the Consolidated Omnibus Budget Reconciliation Act, enables you to maintain your employer’s health insurance plan for up to 18 months, as long as the company employs 20 or more individuals (this period can be extended by an additional 18 months based on certain qualifying events). You qualify if you are laid off, experience reduced work hours, or even if you are terminated (unless it was due to gross misconduct, which is vaguely defined—some employers may choose to offer COBRA coverage to avoid legal issues).
Sounds appealing, right? But here's the catch. While you can keep your employer’s health insurance under COBRA, you’re still on the hook for paying the full premium yourself. Typically, employers cover about 80% of your premiums, which makes the price tag steep: $7,470 for individual coverage and $21,342 for family coverage annually on average, according to the Kaiser Family Foundation.
Additionally, COBRA won’t include other benefits like life or disability insurance, which will further add to your costs. Without any subsidies, you might want to explore alternatives such as Medicaid or Obamacare as more affordable options.
Who is eligible for the enhanced COBRA subsidy?
According to CNBC, the full premium subsidy applies to everyone already eligible for COBRA. It’s also available to employees who missed their original COBRA election window or those who initially signed up but later let their coverage lapse. However, individuals eligible for other group health coverage or Medicare are excluded from the subsidy.
This means that almost anyone who lost their job when the pandemic started will qualify, as the 18-month COBRA coverage period extends through September 30, 2021, which marks the end of the subsidy period.
Starting April 1, employers may offer you a special 90-day enrollment period to join a different group health plan, although your premiums can’t exceed what you were previously paying. This is an optional benefit for employers, so you’ll need to confirm with your former employer if they provide it.
How to apply for the subsidy
Your employer or health insurance provider should send you an eligibility notice. If you were expecting it but haven't received it, contact your company’s HR department or the insurance provider directly. Once you get your eligibility notice for COBRA, you must enroll within 60 days.
