The ARP subsidy covers 100% of COBRA and State mini-COBRA premiums from April 1–Sept. 30, 2021, for certain Assistance Eligible Individuals whose work hours were reduced or whose employment was involuntarily terminated. The subsidy is funded via a tax credit provided to employers, insurers or group health plans, according to the terms of the statute.

The Internal Revenue Service (IRS) has published frequently asked questions (FAQs) on the application of the American Rescue Plan Act (ARP) subsidies for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The FAQs cover a wide range of topics, and are reprinted in this Compliance Bulletin.

The FAQ topics include:

• Eligibility for COBRA premium assistance
• Reduction in hours and involuntary termination of employment
• Coverage eligible for COBRA premium assistance
• Beginning and end of COBRA premium assistance period
• Extended election period
• Extensions under the Emergency Relief Notices
• Payments to insurers under federal COBRA
• Comparable State continuation coverage
• Calculating and claiming the COBRA premium assistance credit

IRS FAQs on COBRA Subsidies