Beginning April 1, 2021 and continuing through September 30, 2021, group health plans providing COBRA continuation coverage are required to offer a 100% subsidy of COBRA premiums for individuals eligible for COBRA due to involuntary termination or reduction in hours.
The premium subsidy is advanced by the employer and is not taxable to the former employee. Employers will be reimbursed via a refundable credit against their Medicare payroll tax liability.
Individuals without a COBRA election in effect on April 1, 2021, but who experienced an involuntary termination of employment or a reduction of hours within the 18 months prior to April 1, 2021, may elect subsidized COBRA coverage prospectively. In addition, eligible individuals who had elected COBRA coverage but discontinued coverage before April 1, 2021 are eligible to re-elect COBRA coverage if they are still within their COBRA 18-month maximum coverage period.
The subsidy is terminated once an individual becomes eligible for coverage under another group plan.