The Internal Revenue Service is providing guidance on a provision of the American Rescue Plan Act that provides temporary assistance with COBRA premiums to people who have lost their jobs.
Notice 2021-46 offers guidance in the form of questions and answers on issues relating to the application of that provision and expands on earlier guidance provided in May in Notice 2021-31 (see story). The notice that the IRS posted Monday answers questions including the availability of premium assistance for individuals who are eligible for an extension but who hadn’t elected it, as well as whether premium assistance for vision or dental-only coverage would end due to eligibility for other health coverage that doesn’t include vision or dental benefits.
It also discusses the availability of premium assistance under a state statute that limits continuation coverage to government employees; whether employers can claim the premium assistance tax credit if the SHOP (Small Business Health Options) exchange requires employers to pay COBRA premiums and which party can claim the premium assistance tax credit in situations involving parties other than an insurer or former common law employer providing the COBRA coverage.
The seal of the Internal Revenue Service hangs on a podium during an IRS Criminal Investigation 100th year anniversary event at the IRS headquarters in Washington, D.C.
Andrew Harrer/Bloomberg
The guidance aims to help people who are still out of work due to the economic fallout from the COVID-19 pandemic or had their work hours reduced.
Earlier this year, the Department of Labor also provided guidance on the COBRA assistance available under the American Rescue Plan Act. It’s available from April 1, 2021 through Sept. 30, 2021 to people who are eligible for COBRA continuation coverage due to a qualifying event such as reduced hours due to change in a business’s hours of operations, a change from full-time to part-time status, taking of a temporary leave of absence, or an individual’s participation in a lawful labor strike, as long as the individual remains an employee at the time that hours are reduced) or an involuntary termination of employment (not including a voluntary termination). However, people are not eligible for the premium assistance if they’re eligible for other group health coverage, such as through a new employer’s plan or a spouse’s plan (not including a qualified small employer health reimbursement arrangement or a health flexible spending arrangement), or if they’re eligible for Medicare.
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