Details of Public Law 117-2, section 9501 , Preserving Health Benefits for Workers

This section allows assistance-eligible individuals (AEIs) to receive 100% premium assistance for COBRA premiums for any period of COBRA coverage during the period beginning on 4/1/2021 and ending on 9/30/2021. AEIs are individuals whose loss of coverage results from a reduction in hours or an involuntary termination of employment and who elect COBRA coverage. For tax years ending after 3/11/2021, AEIs are not eligible for the health coverage tax credit (HCTC) for any period of coverage in which they receive a COBRA premium assistance. COBRA premium assistance amounts are not be included in gross income.

Employers will be allowed a quarterly tax credit against the Medicare payroll tax equal to the premium amounts not paid by AEIs. If the credit amount exceeds the quarterly Medicare payroll tax, the excess will be treated as a refundable overpayment. In addition, any amount of credit increase under this section is subject to the same denial of double benefit, and therefore gross income inclusion, as provided in sections 7001 and 7003 of the CAA.

Individuals receiving premium assistance who become eligible for coverage under a group health plan or Medicare must notify the plan providing COBRA premium assistance. If the individual fails to notify the plan, they may be subject to a penalty of $250 for each failure to notify, or in the case of a fraud a penalty equal to the greater of $250 or 110 percent of the premium assistance improperly received after eligibility for COBRA premium assistance ended.