On May 18, 2021, the Internal Revenue Service (“IRS”) issued Notice 2021-31 (the “Notice”), which answers many questions about the temporary 100% COBRA premium assistance established under the American Rescue Plan Act of 2021 (“ARPA”). Under the ARPA, employers and insurers are required to offer free COBRA coverage between April 1, 2021 and September 30, 2021 to any individual who lost coverage due to an employee's involuntary termination of employment or reduction in work hours and who would be a qualified beneficiary at any time during that period ("Assistance Eligible Individuals" or "AEIs"). Employers and insurers are also eligible to receive a tax credit for the COBRA premiums they would have otherwise received but for the COBRA premium assistance. For purposes of this Legal Update, “COBRA” includes both the COBRA requirements imposed by federal law (which generally apply to employers with 20 or more employees) and State programs that provide for coverage continuation comparable to COBRA continuation coverage. The term “qualified beneficiary” includes the employee, the employee’s spouse, and the employee’s dependent child.
The Notice contains 86 Q&As related to qualification requirements, notice requirements, tax credit information, and more. This Legal Update summarizes some of the key guidance the Q&As provide to employers and insurers regarding the ARPA requirements.Read More