In 86 questions and answers, the IRS in Notice 2021-31 gave employers, health care plans, and insurers background and clarifications on how to provide premium assistance for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) health care continuation benefits to affected employees and other beneficiaries and claim a corresponding tax credit.
The temporary premium assistance and credit are available under the American Rescue Plan Act (ARPA), which provides for a temporary 100% reduction in COBRA premiums for individuals and their families who elect COBRA continuation coverage due to a loss in group health coverage as a result of a reduction in work hours or involuntary termination of their employment. ARPA also provides an extended COBRA election period.
The premium assistance is available only for periods of COBRA coverage beginning after April 1, 2021, but not for periods beginning after Sept. 30, 2021. It does not extend to individuals eligible for coverage under another group plan or Medicare. Get more details here.