It has been over a month since our last Alert addressing the federal government’s first FAQ document that provided some guidance to employers regarding the COBRA subsidy provisions contained in the American Rescue Plan Act (“ARPA”). Although the COBRA subsidy began on April 1, 2021, the first FAQ document left many questions unanswered, causing a struggle with the application of the subsidy in various situations and the need for additional guidance on topics including applying for reimbursement of the subsidy.

On May 18^th, the government finally released the next round of guidance on the COBRA subsidy in IRS Notice 2021-31 that includes additional background on both the premium assistance and credit and a Questions and Answers section that provides answers to many of the questions the first FAQ document left unanswered. Notably, the Question and Answers section of the Notice addresses the following topics:  Eligibility for Premium Assistance, Reduction in Hours, Involuntary Termination of Employment, Coverage Eligible for Premium Assistance, the Beginning of the COBRA Premium Assistance Period, the End of the COBRA Premium Assistance Period, the Extended Election Period, Extensions under the Emergency Relief Notices, Payments to Insurers under Federal COBRA, Comparable State Continuation Coverage, Calculation of COBRA Premium Assistance Credit, and Claiming the COBRA Premium Assistance Credit.

Although it would be impossible to summarize every piece of the 41-page Notice in this Alert, below are the answers to some of the most prevalent questions we received from employers.