On May 18, 2021, the IRS released the much anticipated advice regarding the implementation of the COBRA grant provisions of the American Rescue Plan Act of 2021 (“ARPA” or “Act”). The 40-page guidance document provides useful answers to various questions of interpretation and application of COBRA subsidies, which many employers have been wondering about since President Biden enacted the law on March 11, and which have remained unanswered. through United States Department of Labor Guidelines. The guide contains a series of “questions and answers” ​​covering topics such as:

  • Basic eligibility for COBRA bonus assistance, including the right of employers to require a person to ‘self-certify’ their eligibility
  • The definition of “involuntary termination” or “reduction of hours” for the purposes of determining a grant eligible event
  • Types of coverage eligible for COBRA premium assistance (such as dental, vision, HRA and retirees)
  • COBRA Premium Support Calendar
  • Problems with an extended election period
  • COBRA Extensions Under Existing Emergency Relief Notices
  • Federal COBRA Payments to Insurers and Comparable State Continuation Coverage
  • How to calculate the COBRA premium assistance credit, including with respect to employers who cover COBRA costs (in whole or in part) as severance pay
  • How to claim the COBRA premium assistance tax credit

Perhaps most important for employers, the guide identifies the circumstances that constitute an “involuntary termination” for the purposes of determining eligibility. The guidelines define involuntary termination as termination either (a) “by reason of the independent exercise of the employer’s unilateral authority to terminate employment, other than by implied demand. or explicit from the employee, when the employee was willing and able to continue to provide services ”or (b) degressive discharge. The guide goes on to provide helpful examples of the types of terminations that may be eligible for the grant, including a discussion of resignation, retirement, death, and non-renewal of an employment contract. While the guidance does not purport to answer all questions that may arise regarding the implementation of the COBRA grant under ARPA, it is nonetheless welcome as employers rush to meet their obligations to identify and inform individuals of their COBRA extended election and grant rights under Take Action by May 31, 2021.



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