"[T]he calculations may be less than straightforward depending on the facts and circumstances, particularly where post-termination coverage is subsidized, or if the plan voluntarily provides continued coverage to individuals who are not otherwise qualified beneficiaries."

"These FAQs address the tax credits available under the American Rescue Plan Act of 2021 (the 'ARP') by employers with fewer than 500 employees and certain governmental employers without regard to the number of employees ('Eligible Employers') for qualified sick and family leave wages ('qualified leave wages') paid with respect to leave taken by employees beginning on April 1, 2021, through September 30, 2021, as well as the equivalent credits available for certain self-employed individuals."

[Editor's note: The IRS has published separate FAQs about tax credits that may be claimed for qualified leave wages paid with respect to leave taken by employees prior to April 1, 2021, under the FFCRA and the COVID-related Tax Relief Act, at Tax Credits for Paid Leave Under the [FFCRA] for Leave Prior to April 1, 2021 FAQs.]

"Even if a termination is labeled as 'voluntary' or is designated as a resignation, it won't necessarily be voluntary for ARP purposes. [Notice 2021-31] explains that such a termination will be involuntary if the circumstances indicate that the employee was willing and able to work and, absent the employee's termination, the employer would have terminated the employee and the employee had knowledge of that."

"Some multiemployer plans face a unique issue: they pay COBRA premiums on behalf of participants and beneficiaries but do not have any employees or employment tax liability. Those plans do not have any withheld taxes to retain or otherwise fund the COBRA premiums while waiting for a subsidy from the IRS."

"The premium payee may claim the subsidy credit even if an AEI fails to notify the employer/plan administrator that they are eligible for other group health plan coverage or Medicare. The premium payee is not required to refund to the IRS the subsidy credit arising after the AEI's subsidy ended unless they were aware that the AEI was not entitled to the subsidy."

"Notice 2021-31 provides some direction regarding the rules for claiming the tax credit.... [T]he IRS has released the draft Forms and Instructions for claiming the COBRA subsidy tax credit -- Forms 941 (along with Schedule R) and 7200. [In this article] are answers to some of the questions ... about the draft Form 941. Keep in mind the next Form 941 is due on July 31, 2021, but employers and insurers can generally begin reducing their employment tax deposits now."

"[Notice 2021-31] reiterates that ... an AEI's premium subsidy period can end before September 30, 2021.... According to the FAQs, an AEI who is currently enrolled in individual health insurance coverage through a Health Insurance Exchange may still be eligible to elect COBRA and receive premium assistance.... An employer may allow an AEI to elect coverage different from the coverage under the plan in which the individual was enrolled before the qualifying event, and the subsidy will apply to that newly elected coverage."

"In [Notice 2021-31], the IRS explained that, for individuals still eligible for the premium subsidy on September 30th, the subsidy ... continues until the end of the last 'period of coverage' beginning on or before September 30, 2021.... Additionally, the IRS guidance specified that the death of the employee or former employee who experienced the reduction in hours or involuntary termination will not end their spouse's or children's eligibility for the COBRA subsidy."

"Employers are allowed to revise the subsidy they have offered to employees in order to get reimbursed for the entire ARPA subsidy amount; however, if the employer has contractually agreed to subsidize COBRA, such a change may require an amendment to the severance plan or other agreements. Such amendments may result in procuring new waivers."

30 pages. Topics: [1] Washington update; [2] ARPA FAQs and guidance; [3] New EEOC vaccine guidance; and [4] IRS Notice 2021-26 dependent care guidance.

"[Notice 2021-31 provides that,] if an individual does not elect COBRA and enrolls in coverage under another group health plan, but then ceases to be covered by the other group health plan as of April 1, that prior coverage does not end the period of eligibility for COBRA continuation coverage and does not disqualify the individual from premium assistance."

"According to [IRS Notice 2021-26], not only may a participant carry over the full unused amount from 2020 and use that amount in 2021 tax free, the participant also may elect to contribute up to $10,500 in 2021, resulting in a total non-taxable benefit of up to $15,500 from the DCAP in 2021."

58 pages. "The report provides [1] background on multiemployer DB pension plans, [2] an overview of the special financial assistance, [3] a description of the four eligibility criteria, and [4] a listing of plans (along with each plan's participant and funding data) that satisfy the eligibility criteria using the most recently available data." [CRS Report R46803, May 28, 2021]

"Notice 2021-31 [provides] much needed guidance ... Loss of coverage due to a reduction in hours includes furloughs, lawful work stoppages, and voluntary reduction in hours.... Involuntary termination includes termination for good reason and constructive discharge.... An individual may become a potential AEI more than once."

"A dilemma remains for employers offering stand-alone dental or vision plans in addition to their major medical plans.... Notice 2021-31 is also clear that the extension of timeframes under emergency relief do not apply to the ARPA notice requirements or the extended election period.... The premium assistance credit is includible in the employer's gross income, and an employer is not eligible to receive the credit, if it is also claiming a credit for qualified health plan expenses under the FFCRA or for qualified wages under the CARES Act."

"IRS Notice 2021-31 provides helpful clarifications about the eligibility of COBRA QBs for the COBRA subsidies, the subsidy period, the calculation of the Medicare tax credit, and more. This client alert highlights some of the key points in this new guidance."

"If an AEI's COBRA qualifying event was before April 1, 2021, ... the plan sponsor must make subsidized COBRA available starting as of April 1, 2021, [but] the IRS has now told us that an AEI has the option to waive subsidized COBRA for the period between April 1, 2021 and his or her actual election.... [T]he DOL model Extended Election Notice does not address or include any election mechanism for an AEI's option to waive COBRA coverage for the period between April 1, 2021 and an AEI's actual election."

"The IRS previously published FAQ guidance in 2009 related to a similar 65% COBRA premium subsidy under the American Recovery and Reinvestment Act (ARRA).... While [Notice 2021-31] largely tracks the 2009 guidance, there are certain notable exceptions."

"Employers should be particularly mindful of novel working arrangements during the COVID-19 pandemic, which may fall within the definition of 'furlough.' ... The Q&As contain specific nuances regarding severance plans, separation agreements, and the ability to claim the premium tax credit."

"It is important to analyze whether a dependent or spouse is eligible for ARP premium assistance separately on an individual-by-individual basis based on the first qualifying event making them eligible for COBRA continuation coverage.... While an employer can rely on an individual's self-attestation that they are an assistance eligible individual, be careful ... so that [this] is not also an attestation that might apply for other purposes indicating the individual was involuntarily terminated for all purposes."

"Who exactly are 'assistance eligible individuals' [AEIs]? To what type of benefits does the premium subsidy apply? How does the Outbreak Period Extension Guidance apply to the premium subsidy deadlines? And how is the tax credit claimed? [This article gives] a summary of the answers to these questions provided by [IRS Notice 2021-31]."

"The Service has offered a definition of 'involuntary termination of employment,' which largely comports to conventional wisdom but includes a couple head-scratching comments.... The IRS effectively eliminated the possibility of a more-than-18-month lookback for individuals with COBRA extensions by requiring that any subsidy-eligible individual riding an extension into the April 1–Sept. 30 subsidy window must have elected COBRA when first offered, and kept that coverage in force."

"IRS Notice 2021-26 clarifies the interplay between the carryover and 12-month grace period provisions of the Consolidated Appropriations Act, 2021 (CAA) and the increased Code Section 129 exclusion limit set forth in the ARPA."

"This alert provides an overview of the reduction in hours and involuntary termination guidance contained in [Notice 2021-31], breaking down the types of terminations or reductions in hours that would give rise to COBRA subsidy eligibility during the subsidy window. This alert also covers the interplay between [the Act, the EBSA and IRS Joint Notice of May 4, 2020, and EBSA Disaster Relief Notice 2021-01]. These aspects of the Notice encompass myriad human resource scenarios that employers encounter on a day-to-day basis."

"Generally, the criteria to be an 'assistance eligible individual' for ARPA COBRA subsidy eligibility purposes applies equally to plans regardless of whether they are subject to federal COBRA or State mini-COBRA ... [T]he state continuation coverage need not be equal to or exceed the federal COBRA mandates to be 'comparable'.... The subsidy ... is generally only available for individuals who have either already elected and are paying for state continuation coverage or, who are newly eligible during the ARPA COBRA subsidy period."