Who Can I Get Free COBRA and How?

Unemployed Americans who lost their jobs in the last 18 months may qualify for free health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA.

This provision went into effect on April 1, 2021, when President Joe Biden signed the latest relief bill, the American Rescue Plan (ARP), and provides qualified individuals free health coverage through September 30, 2021.

The purpose is to “help struggling Americans as the COVID-19 pandemic wears on," said Joshua Black, employment and managing attorney of the law office of Joshua C. Black PLC. The Congressional Budget Office estimates two million Americans could benefit from the coverage.

What does ARP cover?

The ARP expands the original provisions of Families First Coronavirus Response Act (FFRCA) “by now including paid time off to obtain a COVID-19 vaccine as well as recovery time in response to the vaccination," said Andrea Rainey, human resources business partner for the Strunk Insurance Group.

In addition, the government provides “eligible employers tax credits for paid leave for employees for COVID-qualifying reasons," said Rainey. The act creates a new COBRA premium subsidy from April 1 to September 30, 2021, for qualified individuals. The subsidy provides 100% of the premium for employees. In turn, employers and carriers will receive a tax credit to fund the subsidy.

Under normal circumstances, employees pay COBRA premiums, and these payments are traditionally more expensive than employer-provided insurance.

Who qualifies for free COBRA under the bill?

Black explains that to qualify for the subsidy, you must:

1) be a worker who had health insurance through an employer; and

2) involuntarily lost his or her job due to a layoff or had hours reduced because of the pandemic.

Typically an employee must elect COBRA benefits within 60 days of separation from their employer; however, if you turned down COBRA coverage prior to the bill's signing, you may be able to opt back in. You should contact your former employer or insurance company to find out additional information.

The coverage extends to those family members who are also on the unemployed individual's health plan.

Who doesn't qualify for free COBRA?

Not every unemployed individual qualifies for the subsidy. “The subsidy isn't available if you get fired for gross misconduct, or you're eligible for Medicare or another health plan through a spouse or another job," said Laura Adams, MBA and insurance expert with US Insurance Agents.

In addition, the COBRA free benefits extension is not available to individuals who worked at companies with fewer than 20 employees. “It is also not available to folks who were not covered by health insurance during employment, or those who were self-employed," said Black.

Also, anyone who turns 26 under a parent's plan or a former spouse who lost coverage due to divorce doesn't qualify.

What do qualified individuals need to do to obtain coverage?

“Employees must elect COBRA coverage with their employee or COBRA administrator. Employers are responsible for notifying any subsidy-eligible participants," said Rainey.

Generally, under the Department of Labor guidelines, employers have 60 days to notify you of your eligibility. Proactive employees have the green light to contact their employer to determine eligibility.

COBRA coverage doesn't apply to co-pays or deductibles. If individuals decide to continue coverage beyond September 30, 2021, the premiums are no longer the employer's responsibility.