American Rescue Plan Act

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On May 18, 2021, the IRS furnished much-needed guidance to employers on how to implement the COBRA premium subsidy provisions under the American Rescue Plan Act (ARPA). Notice 2021-31 includes more than seven dozen Q&As, which cover topics including eligibility requirements, applicable coverage periods and limitations, and notice and election procedures.

As summarized in our prior post, ARPA includes a 100% COBRA premium subsidy for “assistance eligible individuals” who elect (or who previously elected) COBRA continuation coverage for the period from April 1, 2021 through September 30, 2021. “Assistance eligible individuals” are generally those whose terminations occur as a result of an involuntary termination of employment (other than due to gross misconduct, for which COBRA is not available) or due to a reduction of hours.

ARPA provides that, by May 31, 2021, employers are required to distribute a notice regarding the COBRA premium subsidies to “assistance eligible individuals.” Given the May 31 deadline, employers were anxiously awaiting guidance from the IRS on many of the aspects of the COBRA premium subsidies. Pending issuance of guidance by the IRS under ARPA, many looked to the guidance that was issued to implement the 2009 American Recovery and Reinvestment Act (ARRA) COBRA subsidy for some indication of how the IRS might interpret ARPA’s provisions. Fortunately, much of the ARPA guidance—particularly relating to what constitutes an involuntary termination of employment—is consistent with that prior ARRA guidance.Continue Reading IRS Issues Much Needed COBRA Guidance

This is the second of two installments on the American Rescue Plan Act of 2021 (ARPA). Mayer Brown’s first installment describes provisions of ARPA relating to COBRA premium subsidies, changes to the cap on pre-tax dependent care assistance benefits, changes to section 162(m) of the Internal Revenue Code relating to a corporation’s deduction for executive compensation, and updates to the employee retention credit (initially implemented as a part of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act).

This installment focuses on the provisions of ARPA that provide relief to multiemployer and single employer defined benefit plans.Continue Reading Multiemployer and Single Employer Plan Provisions of the American Rescue Plan Act: Help is on the way!