The IRS just released some new supplemental guidance on the COBRA premium subsidy in the American Rescue Plan Act (“ARP”). IRS Notice 2021-46, released July 26, 2021 provides additional color on a handful of discrete subsidy issues that had been addressed in earlier guidance but still caused some confusion. The guidance, in Q&A format, addresses:
Health and Welfare
Calculating the ARP COBRA Premium Subsidy Tax Credit
On May 18, 2021, the IRS released Notice 2021-31 (the “Notice”) providing guidance on the temporary 100% COBRA premium subsidy under the American Rescue Plan Act of 2021 (“ARP”), summarized generally here. The Notice addresses how to calculate the premium subsidy and the corresponding tax credit available to premium payees, as well as the…
A Word from the IRS on Involuntary Terminations of Employment for Purposes of the ARP COBRA Premium Subsidy
One important question that arises when determining whether an individual is eligible for the COBRA premium subsidy under the American Rescue Plan Act of 2021 (“ARP”) is whether the employee has experienced an involuntary termination of employment. (See our prior blogs on the ARP subsidy, here.) The IRS’s recent Notice 2021-31 (the “Notice”) provides…
All Good Subsidies Must Come to an End, Part II: The IRS Adds Some Nuances
By Katrina McCann on
In an earlier post we reviewed the end dates for the ARP COBRA premium subsidy provided by the American Rescue Plan Act of 2021 (“ARP”), and addressed the required expiration notice. This post revisits the topic in light of the new guidance in IRS Notice 2021-31 (the “Notice”).
In general, for individuals otherwise eligible for…
You’ve Sent the COBRA Special Extended Election Period Notices – What’s Next?
By Katrina McCann on
Due to tight timelines and an initial sprint to issue the special extended COBRA election period notices by the May 31st deadline, plan administrators may not have focused on the other COBRA-related notice requirements under the American Rescue Plan Act (ARP). This blog post focuses on these other notices – for individuals who become…
ARP COBRA Subsidy Special Election Opportunity: Who Gets a Second Bite at the Apple, and How Do They Take It?
The American Rescue Plan (“ARP”) offers a special 60-day election period for certain individuals who previously declined or discontinued COBRA coverage (“Assistance Eligible Individuals” or “AEIs,” as defined in ARP). These individuals may elect COBRA coverage prospectively, beginning April 1st, at no cost, as long as they are not eligible for Medicare or…
All Good Subsidies Must Come to an End: ARP’s Expiration Notice Requirements
As mentioned in our earlier posts, the American Rescue Plan Act of 2021 (“ARP”) provides a 100% COBRA premium subsidy for continuation coverage between April 1 and September 30, 2021 for certain assistance eligible individuals (“AEIs”). As employers and plan administrators prepare to educate AEIs about this subsidy, they cannot overlook another necessary notice: …
ARPA COBRA Subsidy – Special Second Election Period (Two Bites at the Apple and Some Additional Food for Thought)
The American Rescue Plan Act of 2021 (“ARPA”) provides a 100% COBRA premium subsidy for “assistance eligible individuals” for periods of coverage occurring between April 1, 2021 and September 30, 2021, as summarized here. An “assistance eligible individual” includes any qualified beneficiary who is eligible for COBRA coverage as a direct result of a…
COBRA Subsidies for Involuntary Termination or Reduction in Hours – What is Old is New Again
There is an old saying – “People with weak stomachs should not watch sausage or legislation being made.” A great application of that aphorism is seen in the current COBRA subsidy proposed legislation making its way through Congress.
The idea is simple – if people need continuing health care coverage (COBRA coverage) because they are…