IRS issues guidance on COBRA subsidy

The IRS issued guidance May 18 on expanded COBRA subsidies under the American Rescue Plan.

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Four things to know:

1. The American Rescue Plan provides a temporary 100 percent reduction in premiums for COBRA recipients.

2. The subsidy is intended for employees who lost health insurance because of a reduction in work hours or layoffs.

3. The subsidy is for coverage from April 1 through Sept. 30.

4. The entity to which COBRA premiums are payable, as in the employer, insurer or multiemployer plan, are entitled to a reimbursement. That reimbursement can be sought through a refundable tax credit against the entity’s share of Medicare taxes.

Read the full guidance here.

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