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IRS Releases Guidance on COBRA Premium Assistance Under ARPA

Friday, May 21, 2021


On May 18, the Internal Revenue Service (IRS) released Notice 2021-31 (the Notice), providing much-anticipated guidance regarding the COBRA premium assistance and tax credit provisions of the American Rescue Plan Act of 2021 (ARPA). Under ARPA, group health plans subject to COBRA – including state continuation coverage laws – are required to provide free continuation coverage and expanded enrollment rights to those who qualify as assistance eligible individuals. To offset these costs, tax credits will be made available.


Though the effective date of ARPA’s COBRA provisions was April 1, 2021, the Notice is the first detailed instruction that addresses many of the practical issues encountered by employers. The Notice covers 86 questions and answers on various aspects of the law. Some highlights of the Notice include:


Eligibility for Premium Assistance


Involuntary Terminations


Applicable Coverage


Extended Election Period


Tax Credits


The COBRA provisions under ARPA will remain in effect until September 30, 2021. Employer-sponsors should therefore undertake a careful review of their policies and procedures to ensure compliance according to the Notice.


Additionally, employers should continue to be mindful of separate COBRA obligations imposed by the Department of Labor in response to COVID-19, which extend certain election and premium payment deadlines beyond the September 30 expiration of ARPA’s provisions. In light of these various (temporary) COBRA modifications that employers face, ongoing coordination with COBRA third-party administrators, insurance carriers, and stop-loss carriers will be critical.


Additional Resources



This Benefits Bulletin is not intended to be exhaustive, it is for informational purposes only and should not be considered legal or tax advice. A qualified attorney or other appropriate professional should be consulted on all legal compliance matters.


Posted by in Blog, Health & Benefits, Human Resources

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