IRS Offers Additional ARPA COBRA Subsidy Guidance
On July 26, 2021, the IRS introduced Notice 2021-46, which included 11 additional FAQs designed to further address the proper usage of the American Rescue Plan Act (ARPA) COBRA subsidy. Yesterday’s new guidance serves as a supplement to the prior guidance issued in May of this year via Notice 2021-31. We blogged about the previous guidance in much detail here.
To provide some brief background, ARPA’s provisions include a temporary 100% subsidy for COBRA continuation coverage for certain assistance eligible individuals (AEIs) who experience an involuntary termination (aside from a termination for gross misconduct) or for individuals who underwent a reduction in hours (either voluntary or involuntary). The 100% reduction in premiums encompasses the timeframe between April 1, 2021 through September 30, 2021.
The new questions and answers primarily focus on the following areas of ARPA:
- The availability of the ARPA COBRA subsidy for individuals who did not make a previous election but are still eligible for an extended COBRA continuation coverage period due to a disability determination.
- Whether premium assistance for dental-only or vision-only coverage ends when an individual becomes eligible for other group health coverage or Medicare that does not include dental or vision benefits.
- Availability of premium assistance under a State statute that limits continuation coverage exclusively to State or local government employees.
- General clarity on the entity that may claim the premium assistance tax credit in various situations, including multi-party arrangements.
- The obligations of State agencies as it pertains to the premium assistance credit.
Please continue to check back in with us for updates and do not hesitate to reach out to your Account Managers and Sales Executives for additional information.
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