skip to main content
X

COBRA PREMIUM ASSISTANCE AND TAX CREDIT

COBRA PREMIUM ASSISTANCE AND TAX CREDIT

Earlier this year, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law. ARPA provides for COBRA premium assistance to help assistance eligible individuals continue health benefits provided they meet eligibility requirements between April 1, 2021 and September 30, 2021. An assistance eligible individual is a COBRA qualified beneficiary who is eligible for COBRA continuation coverage by reason of a qualifying event that is a reduction in hours or an involuntary termination of employment and elects COBRA continuation coverage. An individual is not eligible for the premium assistance if they are eligible for other group health insurance.

If an individual becomes assistance eligible , the individual will not be required to pay any COBRA premiums. Instead the amounts will be paid by the employer. The employer must notify the employee of this availability when they become eligible due to reduced hours or termination of employment. In addition, within 15-45 days of the coverage period ending under this assistance plan, the employer must notify the individual of the upcoming termination.

An employer or plan who takes advantage of the premium assistance by making these payments, may take a tax credit for the amount of premium assistance paid by the employer. It is expected that this credit will be claimed on Form 941 and employers will be able to file Form 7200 to claim an advance on the subsidy. The IRS has yet to release revised forms and instructions related to this credit.

 

HAVE A QUESTION?

Please complete this form to hear from one of our seasoned tax professionals

 

Hide Firm Disclaimer

©2021 UHY LLP. ALL RIGHTS RESERVED.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.