Are there any limits on the type of group health coverage to which the premium subsidy applies?
The subsidy applies to whatever level of COBRA coverage the terminated employee elects. If the employer allows, employees may elect coverage different than that in effect at the time of termination, so long as the premium for that option is no higher than the premium for the pre-termination option. How is the subsidized premium paid, an how does the employer obtain reimbursement for the portion it pays? The employer must collect 35% of the COBRA premium from the eligible individual. The employer sponsoring the plan must pay the remaining 65% of the premium (i.e., the “subsidy”). The employer or plan then obtains reimbursement by taking a payroll tax credit (toward the entity’s wage withholding or FICA taxes – IRS Form 941). If this credit against employment taxes is insufficient to recover the full premium subsidy, the employer will qualify for direct payment from the federal government, which is handled in the same way as an overpayment of employment taxes. Since employers may not be
Related Questions
- I am changing from one type of coverage to another, but staying within the same employers group health plan. Can a pre-existing condition exclusion be applied to my new coverage?
- How can I file an appeal if my former employer’s group health plan denies my application for the premium subsidy?
- What Type of Health Insurance Coverage Qualifies the Employee to Open a Health Savings Account?
