IRS Guidance on COBRA Premium Assistance Tax Credits for Employers/Plans

The Internal Revenue Service (IRS) released much-needed guidance on the American Rescue Plan Act of 2021 (ARPA) COBRA Premium Assistance program for employers, plan administrators, and health insurers on May 18, 2021.  The guidance, outlined in Notice 2021-31, includes further details on claiming the COBRA premium assistance payroll tax credit and examples, as highlighted below:

Further guidance is anticipated on certain open questions remaining on the COBRA premium assistance provisions, such as treatment of the credit for a fully-insured plan that is not subject to federal COBRA. According to the Notice, “The Treasury Department and the IRS are continuing to consider these issues and the possibility of issuing guidance with respect to them.”

Employers (premium payees) or their third-party payers should consult with their legal or tax advisors for specific advice on reporting and compliance matters.


This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.


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