Some employers pay part of the COBRA premium for several months for terminated employees. How is the 65% federal premium subsidy calculated in such situations?
The federal subsidy is keyed in to the amount of premium paid by the beneficiary. Take the example of a beneficiary who pays $200 of a $1,000 monthly COBRA premium for family coverage for three months after termination of employment. In that example, the individual would have to pay a premium of only $70, which is 35% of the $200 premium, while the government would pick up $130, which is 65% of the $200 premium he otherwise would have to pay. Q: The federal COBRA premium subsidy is reduced for individuals earning at least $125,000 a year and unavailable to those earning $145,000 or more. Can former employers deny the subsidy to such individuals? The employer cannot prevent the beneficiary from receiving the subsidy and only the beneficiary can waive that right. However, beneficiaries whose income exceeds the allowable amount would be required to return the subsidy to the government. Benefit experts say it may make sense for higher-income individuals to take the subsidy and return it if
