Decoding the COBRA Subsidy and What to Do Next with Updated IRS Guidance
When in doubt, take it from the horse’s mouth.
According to the IRS website, “The American Rescue Plan (ARPA) provides a temporary 100% reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment.
The new law provides a corresponding tax credit for the entities that maintain group health plans, such as employers, multiemployer plans, and insurers. The 100% reduction in the premium and the credit are also available with respect to continuation coverage provided for those events under comparable State laws, sometimes referred to as “mini-COBRA.”
Notice 2021-31 provides guidance for employers, plan administrators, and health insurers regarding the new credit available to them for providing continuation health coverage to Assistance eligible individuals (AEIs) under COBRA.
As you can probably imagine, this is a complex collection of processes.
Watch our latest Brews with Bruce discussion featuring, Bridget Bingaman, SVP of Transformation, and me, as we discuss and dissect the latest updates. Watch below.
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If you’re like most HR professionals, keeping up with changing benefits compliance issues can seem like a full-time job. That’s why we created and maintain the Businessolver Compliance Inventory.
Featuring more than 100 state and federal regulations, version 2.03 of this comprehensive guide was recently updated to include:
- The American Rescue Plan Act (ARPA)
- COBRA subsidies and dependent care FSA maximums
- Clarification on requirements of relief contained in within the Consolidated Appropriations Act
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