22 Apr Your COBRA Premiums May Be Free Through September 2021
COBRA is a federal law that allows eligible workers to keep their employer-sponsored health insurance coverage after experiencing a “qualifying event” like leaving their jobs. One challenge with COBRA is that the monthly premium may be expensive because workers have to pay the full amount of the premium.
The American Rescue Plan Act (ARPA), signed into law in March 2021, includes a program to pay 100% of COBRA premiums for people who lost their job, or have their hours reduced and no longer qualify for employer-sponsored health insurance. This is not available to workers who voluntarily leave their jobs.
COBRA is a continuation of the same health insurance policy that you had through your job.
Free premiums began April 1, 2021, and end September 30, 2021. Benefits end earlier if your maximum period of COBRA coverage (usually 18 months) ends or if you become eligible for Medicare or another group health plan.
Am I eligible for premium-free COBRA?
Workers may qualify for free premiums, if they:
- Become eligible for COBRA now because of involuntary job loss or a reduction in hours.
- Were previously eligible for COBRA coverage, but did not take it. They will get a second chance to elect COBRA beginning April 1, 2021. They will not have to pay any back premiums.
- Signed up for COBRA, but then stopped COBRA before their maximum period of coverage ended. They can re-enroll in COBRA beginning April 1, 2021. Workers can keep the COBRA coverage for as long as they would have originally been eligible for COBRA.
To understand how these rules work, here are some examples:
- Lisa lost her job in January 2020, a qualifying event under COBRA. Her employer told her she could elect COBRA, but she didn’t because it was too expensive. If she had elected COBRA, she would have been eligible for 18 months, through June 2021. Now, ARPA requires her former employer to send her a new notice telling her about the free COBRA premiums. Lisa can sign up for COBRA April 1, 2021, and have free premiums. Her COBRA coverage would still end in June 2021 based on her maximum period of eligibility.
- Ricardo’s hours were reduced in June 2020, because business was too slow. Because he is no longer a full-time employee, he isn’t eligible for health insurance through his job. Ricardo signed up for COBRA and his 18 months of eligibility would have ended December 2021. But, he stopped COBRA in November 2020 because he could no longer afford the monthly premiums. Now, ARPA requires his former employer to send him a notice telling him about the free COBRA premiums. Ricardo may now re-enroll in COBRA in April 2021. He will not have to pay any premiums through September 2021, and he can continue it after that (paying the premiums himself) through December 2021.
- Alex lost her job in August 2020, and signed up for COBRA. She has been paying the premiums herself. Now, ARPA requires her former employer to send her a notice telling her about the free COBRA premiums. From April 2021 through September 2021, her premiums will be free. Starting October 1, 2021, she will be able to continue COBRA by paying the premiums herself again through February 2022.
Employees eligible under their state COBRA law, or “mini COBRA,” are also eligible for this premium subsidy.
What if I did not receive my notice from my former employer?
If you think you are eligible for premium-free COBRA, but have not received a notice from your former employer, the Department of Labor provides this document with information and a form you can send to your former employer.
It may be helpful to contact your health insurance company or benefits plan administrator directly as well.
If you think you should receive this COBRA subsidy, but have not, please be advised to continue paying your COBRA premiums until the issue is resolved to avoid potential cancellation of your policy.
For more information, the Department of Labor provides this FAQ document.
- For assistance, call the Employee Benefits Security Administration (EBSA) at 866-444-3272 or visit askebsa.dol.gov.
What happens when premium-free COBRA ends on September 30, 2021?
This premium assistance is scheduled to end September 2021, and will not be a triggering event that gives individuals access to a special enrollment period to buy a health insurance plan from the Health Insurance Marketplace. For more information about the state Health Insurance Marketplaces, read our Quick Guide to Health Insurance Marketplaces.
If this rule does not change, then those who receive free COBRA through September may have no choice but to pay full price for COBRA starting October 1, 2021. Some members of Congress have asked the Department of Health and Human Services to allow these workers to enroll in a marketplace plan ahead of time. You can find our Advocacy Resources here.
So, it is important to think through what your health insurance options will be at that time. One alternative to accepting the free COBRA premiums is to look at your options for free or low-cost health insurance in the Marketplace now, during the current special enrollment period that will last until August 15, 2021. Read this blog details.
For more information about your health insurance options and how to pick a plan that works for you, visit TriageCancer.org/HealthInsurance.
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