The Subsidy Period begins on the later of April 1, 2021 or the date the AEI becomes eligible for COBRA coverage. The Subsidy Period ends on the earliest of (a) September 30, 2021; (b) the end of the 18-month maximum COBRA coverage period; or (c) the date the individual becomes eligible for other group health coverage or Medicare.
For example, imagine five employees: Amy, Barry, Cathy, Danny, and Elena. These employees lost their employer health plan coverage due to involuntarily termination on January 31, 2020.
Amy elected COBRA coverage a few weeks after termination by submitting a COBRA election form. As of March 31, 2021, Amy still has COBRA coverage. Amy’s 18-month maximum COBRA period will end June 30, 2021. Amy is entitled to the COBRA subsidy for the months of April, May, and June 2021.
Barry elected COBRA coverage after termination, but discontinued it after two months. If Barry elects COBRA coverage during the extended election period outlined below, Barry will receive subsidized COBRA coverage for April, May, and June 2021.
Cathy did not elect COBRA coverage following termination of employment. Like Barry, if Cathy elects COBRA coverage during the extended election period, Cathy will receive subsidized COBRA coverage for April, May, and June 2021.
Danny became entitled to Medicare in March 2021. Even if he does not enroll in Medicare, Danny is not eligible for the COBRA subsidy because of Medicare entitlement.
Upon employment termination, Elena was eligible to enroll in her spouse’s health plan. Elena did not enroll at that time, and her spouse’s plan requires timely enrollment upon a qualifying event or during open enrollment. Elena may be eligible for the COBRA subsidy until a new qualifying event occurs or her spouse’s plan has an open enrollment during the COBRA subsidy period.