Q.- Our plan is not subject to federal COBRA and is not subject to state continuation coverage. We just voluntarily provide continuation coverage to terminated employees. If we offer them “free” coverage, may we take a tax credit for what we pay to give the free coverage?
A.- No. If your plan is not required to provide continuation coverage under COBRA or under a state mini-COBRA law, you do not meet the requirements to provide the COBRA premium subsidy under the American Rescue Plan Act. If you voluntarily offer continuation coverage and pay for that coverage, you will not be able to recoup the cost of that coverage through a tax credit. Consult your tax advisor.