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Yes No Checkbox If an employee declined COBRA coverage, or if the employee elected COBRA coverage and later discontinued it, the employee now has a second chance to elect coverage and receive the subsidy. (Photo: Shutterstock)

The American Rescue Plan Act of 2021 (ARPA), among other significant items, imposed new obligations for employers pursuant to the Consolidated Omnibus Reconciliation Act (COBRA). Specifically, ARPA requires employers to provide COBRA premium subsidies to certain employees from April 1, 2020, through Sept. 30, 2021. The requirement comes with complicating definitions, retroactivity provisions, and new forms, creating a temporary compliance issue for employers. On April 7, the U.S. Department of Labor issued model notices and “FAQ’s” to assist with these compliance issues.

The COBRA subsidy is available from April 1 to Sept. 30 to “assistance eligible individuals,” that is, individuals who are eligible for COBRA coverage as a result of an involuntary termination or a reduction in hours. The act specifically excludes individuals who voluntarily terminate their employment. “Assistance eligible individuals” are not required to pay their COBRA premiums from April 1 through Sept. 30. The employer or plan to whom the individual would normally pay premiums is entitled to a Medicare tax credit for the amount of the premium assistance. There is no guidance from the Department of Labor or the Internal Revenue Service regarding these tax credits.

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