The Wait is Over: Treasury and IRS Release COBRA Premium Subsidy Guidance
Yesterday, the Treasury Department and the IRS released detailed questions and answers providing guidance on various implementation issues related to the COBRA premium subsidy under the American Rescue Plan Act of 2021 (ARP).
By way of background, ARP includes a 100% COBRA premium subsidy for qualifying individuals during periods of coverage from April 1, 2021 to September 30, 2021. The COBRA premium subsidy is implemented by means of a tax credit, whereby the person to whom COBRA premiums would otherwise be payable claims a tax credit in the amount of the premium.
Yesterday’s guidance provides detailed information about how to calculate and claim that tax credit. It also provides information about other implementation issues, including the following:
- who is eligible for the premium subsidy,
- when a termination of employment is considered involuntary for subsidy purposes,
- the types of coverage to which the subsidy applies,
- the period of coverage to which the subsidy applies,
- the right to make a special COBRA election, and
- the interaction with state mini-COBRA coverage.
A link to the guidance is here.