Treasury Releases Much Anticipated COBRA Direction

Yesterday, the IRS issued Notice 2021-31, which provides guidance needed to implement the temporary COBRA subsidy provisions included in the recently enacted $1.9 trillion COVID relief/stimulus package.

The American Rescue Plan contained a 100% federal subsidy to reduce employer sponsored health care premiums for workers eligible for COBRA – due to an involuntary termination of employment or reduction in hours – between April 1, 2021 and September 30, 2021. The new law also adds a corresponding tax credit for the entities that maintain group health plans.

Notice 2021-31 furnishes substantial information regarding the calculation of the credit, the eligibility of individuals, the premium assistance period, and other information vital to employers, plan administrators, and health insurers.

Notice 2021-31: https://www.irs.gov/pub/irs-drop/n-21-31.pdf