Sarah Borders, CEBS June 28, 2021 1 min read

Hot Topic: Termination and the COBRA Subsidy

"An employer is terminating an employee due to elimination of the position, but the elimination is not related to COVID. Would he or she be eligible for the subsidy in this situation?"

The COBRA event does not have to be related to COVID.

If an individual lost eligibility due to any reduction in hours or was terminated from employment involuntarily (position eliminated would be an involuntary termination of employment), then whatever coverage was in place the day before the triggering event would have to be subsidized from 4/1/21 until 9/30/21 (or whenever their 18-month COBRA maximum begins or ends during this 6-month period). However, if any qualified beneficiaries become eligible for other group coverage or Medicare, they do not have to be offered a COBRA subsidy.

Thus, if this employee is being involuntarily terminated from employment and that causes a loss of coverage, they would need to be notified of their right to elect COBRA and eligibility for the subsidy at least through 9/30/21, unless they become eligible for other group health plan coverage or Medicare during that time.


Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.