IRS issues additional COBRA premium Q&A guidance


The IRS recently issued additional guidance (Notice 2021-46) on the extended coverage and subsidy provisions under Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

The American Rescue Plan Act of 2021 (ARPA) included temporary COBRA subsidy provisions funded by employer tax credits that allow “Assistance Eligible Individuals” (AEIs) to receive COBRA subsidies from April 1, 2021, to Sept. 30, 2021 (the “assistance period”). The IRS provided initial COBRA subsidy guidance to employers in Notice 2021-31, which is now supplemented by new Notice 2021-46. The guidance addresses additional issues with 11 new Q&As, including:

  • The availability of the premium assistance to individuals eligible for an extension who had not elected it
  • Whether premium assistance for vision-only or dental-only coverage ends due to eligibility for other health coverage that does not include vision or dental benefits
  • Availability of premium assistance under a state statute that limits continuation coverage to government employees
  • Whether employers may claim the premium assistance tax credit if the Small Business Health Options Program (SHOP) exchange requires employers to pay COBRA premiums
  • Which party may claim the premium assistance tax credit in situations involving parties other than an insurer or former common law employer providing the COBRA coverage





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