On March 11th, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA). Amongst several other provisions, ARPA fully subsidizes COBRA premiums for assistance-eligible individuals. An assistance-eligible individual is an individual who is eligible for COBRA due to the COBRA-qualifying event of termination of employment or reduction in hours, except for an individual’s voluntary termination of employment. The program began on April 1st, 2021, and ends on September 30th, 2021. Shortly after the ARPA passed on March 11, 2021, Katz/Pierz covered what we knew about the 2021 COBRA assistance program during a webinar held on March 23rd. Access a recording of the event here.
Since then, the Department of Labor and the IRS have both released notices about the COBRA premium subsidy program to provide employers additional guidance.
On April 7th, 2021, the U.S. Department of Labor’s Employee Benefits Security Administration posted model notices and FAQs related to the new COBRA premium subsidies established under the ARPA. This release still left many questions unanswered until the IRS issued its much-awaited notice on May 18th, 2021. The IRS Notice 2021-31 clarified the definition of “involuntary termination” and a “reduction in hours” as it related to qualifying events for the 2021 COBRA assistance program. Katz/Pierz has combined several UBA Advisors that explain the regulatory agencies’ notices, which can be accessed by clicking on the “Download PDF” button below. We encourage all employers to read this additional guidance to ensure you are in compliance with the requirements of ARPA’s 2021 COBRA assistance program.
As we continue to learn more information about the COBRA subsidy program, we will be sure to update this post. Please reach out to your Katz/Pierz representative with specific questions.