COBRA Credit for Q4 2021 Form 941

The American Rescue Plan Act (ARPA) allowed for a COBRA Premium Subsidy, which provided a 100% subsidy to the employer for the cost of COBRA continuation coverage for eligible employees. The subsidy applied for up to six months of coverage from April 2021 through September 2021 (provided employees were within their maximum COBRA period and not eligible for coverage elsewhere). For subject plans, the employer is required to pay the COBRA premium and is eligible for a payroll tax credit reimbursement on the quarterly 941.

References:

• Department of Labor
• Internal Revenue Service 

Can the subsidy last beyond September 30, 2021?
The IRS clarified in Notice 2021-31 that for individuals still eligible for the premium subsidy on September 30, the subsidy will not necessarily end on that date. Instead, the subsidy continues until the end of the last “period of coverage” beginning on or before September 30.  A “period of coverage” means a month or shorter period regarding premiums that would normally be charged. For example, if premiums are usually assessed on a bi-weekly period basis, including the period from September 26 to October 16, the subsidy would not be prorated to September 30th but would instead cover the entire period ending on October 16.

UPDATE: COBRA premiums are fully subsidized through September 30, 2021, and the bill extended the subsidy through September 30, 2022. See here for more information, or for questions regarding the ARPA COBRA Subsidy, contact us today.