The IRS issued Notice 2021-46 providing additional direction on the COBRA premium subsidy required under the American Rescue Plan Act (ARPA). This guidance provides details on items not addressed previously.
ARPA requires a 100% COBRA premium subsidy for certain individuals entitled to COBRA due to reduction of hours or involuntary termination of employment. To be eligible for the subsidy, the COBRA qualified beneficiary must have a qualifying event that is a reduction in hours or involuntary termination of employment, elect COBRA, elect to be considered an assistance-eligible individual, and not be eligible for other group health coverage or Medicare. Refer to our prior article which may be found here.
Notice 2021-46 makes the following clarifications:
- The ARPA premium subsidy is available to continuants who extend COBRA due to a second qualifying event or disability, even if they do not tell the plan before the 18 month COBRA period ends.
- The ARPA premium subsidy ends upon eligibility for any other group health plan coverage or Medicare. This is the case even if only dental or vision coverage was being continued and the eligibility for other coverage does not include dental or vision benefits.
- The entity who claims the payroll tax credit for an ARPA premium subsidy under federal COBRA is the applicable common law employer, with exceptions for certain state-mandated coverage and business reorganizations.
A copy of the new notice may be accessed by clicking here.
