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May 28, 2021
The Internal Revenue Service (IRS) 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).
Q-63: As a general rule, what is the amount of the premium assistance credit for a quarter?
If the employer does not subsidize COBRA premium costs for similarly situated qualified beneficiaries who are not Assistance Eligible Individuals, the credit for a quarter is the amount equal to the premiums not paid by Assistance Eligible Individuals for COBRA continuation coverage due to the application of § 9501(a)(1) of the ARP for the quarter. In this case, the amount of the premiums not paid by the Assistance Eligible Individuals is the premium amount charged for COBRA continuation coverage to other similarly situated covered employees and qualified beneficiaries (for example, coverage for a single individual, individual plus one, or family who are not Assistance Eligible Individuals). The premium amount also includes any administrative costs otherwise allowed (that is, generally 102 percent of the applicable premium under § 4980B(f)(4)).