Who is eligible to receive the COBRA premium reduction?
ARRA makes the premium reduction available for “assistance eligible individuals.” An Assistance Eligible Individual is a COBRA qualified beneficiary who meets the following requirements:
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Is eligible for COBRA continuation coverage at any time during the period from September 1, 2008 through December 31, 2009;
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Elects COBRA coverage (when first offered or during the additional election period provided by ARRA); and
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The COBRA election opportunity relates to an involuntary termination of employment that occurred at some time from September 1, 2008 through December 31, 2009.
However, if the individual is eligible for other group health coverage (such as through a new employer’s plan or a spouse’s plan) or Medicare he/she is not eligible for the premium reduction.
If the employee’s termination of employment was for gross misconduct, the employee and any dependents generally would not qualify for COBRA or the premium reduction.
Electing the premium reduction disqualifies the individual for the Health Coverage Tax Credit. Additionally, certain high-income individual may have to repay the amount of the premium reduction through an increase in their income taxes. If the amount earned for the year is more than $125,000 (or $250,000 for married couples filing a joint federal income tax return), individuals may have to repay all or part of the premium reduction through an increase in their income tax liability for the year. For more information, visit the IRS web page on ARRA.