ARPA Premium subsidy Experation

The IRS recently released IRS Notice 2021-46, which provides new guidance and clarifications regarding the COBRA premium subsidy in the American Rescue Plan Act (“ARPA”). This notice follows an earlier release of IRS FAQs in Notice 2021-31.

Notice 2021-46 provides background information about the COBRA premium assistance, addresses several questions with specific examples and exceptions provided, and provides technical guidance on claiming the tax credit in connection with the subsidy.

Plan sponsors and issuers might need to amend their Form 941 filings if their previous interpretations of ARPA requirements resulted in incorrect filing.

The ARPA provides a temporary 100% COBRA premium subsidy for individuals who elect COBRA continuation coverage due to a loss of coverage resulting from any involuntary or voluntary reduction in hours or involuntary termination of employment. The COBRA premium subsidy will expire on September 30, 2021, unless an extension is granted. HR Service will provide any updates as they become available.

Notice of Expiration to AEIs of ARPA COBRA Premium AssistanceUnder provisions of the American Rescue Plan Act

(“ARPA”), COBRA administrators are required to provide Assistance Eligible Individuals (“AEIs”) with written notice of the date on which their COBRA subsidy will end. The notice must be provided no earlier than 45 days before the expiration date and no later than 15 days before that date.

AEIs whose premium subsidy will be ending on September 30, 2021, due to the expiration of the ARPA COBRA subsidy will need to be given a notice between August 16, 2021, and September 15, 2021. The notice is not required if an AEI’s subsidy ends as a result of becoming eligible for coverage under another group health plan or through Medicare rather than the expiration of the subsidy.