COBRA Premium Subsidy Law —What a Difference a Year Makes

Last year around this time, COBRA administrators were waiting with dread to see if Congress would enact yet ANOTHER extension to the continuation coverage premium subsidy law. The law had been extended three times before, so why not four?

But due to the political shifts in Congress as a result of the 2010 elections, and a heightened concern over the federal budget — and how the subsidy program would be paid for — the talk of another extension fizzled out. As you may recall, the American Recovery and Reinvestment Act of 2009, as amended, provided that assistance-eligible individuals” (AEIs) who had an involuntary termination of employment (or a reduction in work hours followed by such a termination) within certain time periods were entitled to receive a 65-percent subsidy for continuation coverage premiums for up to 15 months.

That was a big bill for the government to foot, and apparently, it decided enough was enough.

So when this May 31st rolls around, it will be the one-year anniversary of the end of the subsidy eligibility period, and in a few more months, the actual subsidies for any remaining AEIs will end. But one other premium assistance alternative still remains on the books, ARRA’s precursor — the Health Coverage Tax Credit (HCTC).

As explained by COBRA expert Paul Hamburger, Esq. in Mandated Health Benefits — The COBRA Guide, the HCTC program was originally enacted as part of the Trade Act of 2002. As originally enacted, it provided a 65-percent tax credit for COBRA coverage (as well as 10 other specified types of qualifying health coverage) to benefit certain workers. The specific workers who could benefit from the HCTC are:

1)       individuals who receive a benefit through one of the Trade Adjustment Assistance (TAA) programs;

2)       Pension Benefit Guaranty Corporation (PBGC) payees who are 55 years old or older; and qualified family members of TAA recipients and PBGC payees.

The IRS administers the HCTC program, and detailed information on the program appears in the COBRA Guide and on the IRS website for the HCTC program at,,id=187948,00.html.

The HCTC is a more limited law than the ARRA subsidy law; however, it is good to remember that although one premium assistance law is ending, the HCTC is still alive and well.