The American Recovery and Reinvestment Act of 2009 created a COBRA subsidy for workers laid off between September 1, 2008 and December 31, 2009. This subsidy pays for 65% of the COBRA premium for eligible workers.
Some have asked whether this COBRA subsidy counts as taxable income. This depends on how much money the taxpayer reports as income on their tax return. If an individual has a modified gross income falling between $125,000 and $145,000, or joint filers report between $250,000 and $290,000, then any COBRA subsidy payments received would count towards their taxable income for that year. Otherwise, subsidy benefits are NOT taxable.
Source:
Gentry Locke Rakes & Moore, LLP. "New Mandated COBRA Subsidies: A Practical Primer". February 27, 2009.
