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ARTICLE · 10 AUGUST 2021

IRS Issues Additional Guidance On The COBRA Subsidy

Ogletree, Deakins, Nash, Smoak & Stewart
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On July 26, 2021, the Internal Revenue Service (IRS) released Notice 2021-46 to provide additional guidance on the Consolidated Omnibus Budget Reconciliation Act (COBRA)...

United StatesEmployment and HR
Jason Rothman
Jason Rothman
Deborah Andrews
Deborah Andrews
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On July 26, 2021, the Internal Revenue Service (IRS) released Notice 2021-46 to provide additional guidance on the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy under the American Rescue Plan Act of 2021 (ARPA). On May 18, 2021, the IRS released Notice 2021-31 to address issues related to subsidy eligibility and calculation of the tax credit. The new guidance supplements Notice 2021-31 and addresses additional issues. Although Notice 2021-46 only includes 11 questions and answers, it provides important information for employers.

Availability of the Subsidy

In Notice 2021-31, the IRS explained that if the initial qualifying event was a reduction in hours or an involuntary termination of employment, the subsidy is available to individuals who elected and remain on COBRA for an extended period due to a second qualifying event (e.g., a disability determination), provided that the extended period of coverage falls between April 1, 2021, and September

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