No the ini­tial infor­ma­tion was insuf­fi­cient, as with any hasti­ly con­trived rules.  For­tu­nate­ly, the IRS issued Notice 2021–31, which clar­i­fies in a brisk 86 ques­tions what every­one has been won­der­ing, but which most of us had sur­mised.  High­lights are:

  • The new Forms 941 (quar­ter­ly wage report, along with Sched­ule R) and 7200
  • The tax cred­it tak­en on the quar­ter­ly wage report is against the Medicare amount due
  • Employ­er may rely on indi­vid­ual attes­ta­tion that they are not eli­gi­ble for oth­er coverage
  • Avail­abil­i­ty of oth­er cov­er­age does not pre­clude exten­sion if they can­not yet enroll in it
  • Sec­ond qual­i­fy­ing events mere­ly con­tin­ue cov­er­age and thus the sub­sidy – no break
  • All basic cov­er­age is eli­gi­ble for a sub­sidy EXCEPT a health FSA (HRA IS included)
  • Retiree cov­er­age is includ­ed for pur­pos­es of the subsidy
  • Reduc­tion in hours is def­i­nite­ly seen as an invol­un­tary termination

Most impor­tant­ly, the notice makes clear what con­sti­tutes Invol­un­tary Ter­mi­na­tion which, along with reduc­tion in hours, are the two qual­i­fy­ing events that allow for receipt of the subsidy:

The Notice defines an invol­un­tary ter­mi­na­tion of employ­ment as a sev­er­ance from employ­ment due to the inde­pen­dent exer­cise of the employer’s uni­lat­er­al author­i­ty to ter­mi­nate the employ­ment, oth­er than due to the employee’s implic­it or explic­it request, where the employ­ee was will­ing and able to con­tin­ue per­form­ing ser­vices.  An employ­ee ini­ti­at­ed ter­mi­na­tion of employ­ment con­sti­tutes an invol­un­tary ter­mi­na­tion of employ­ment for pur­pos­es of the Sub­sidy if the ter­mi­na­tion of employ­ment con­sti­tutes a ter­mi­na­tion for a good reason.

The notice is spe­cif­ic about some ter­mi­na­tion sce­nar­ios that qual­i­fy as invol­un­tary termination

  1. Non renew­al of an employee’s con­tract if the employ­ee was oth­er­wise will­ing to enter into a new con­tract or con­tin­ue employ­ment with­out a con­tract, assum­ing the employ­ee knows that the con­tract would only be for a lim­it­ed amount of time
  2. Par­tic­i­pa­tion in a win­dow pro­gram that meets appro­pri­ate Trea­sury requirements
  3. Employ­er ini­ti­at­ed action to end an individual’s employ­ment while the indi­vid­u­als is absent from work due to ill­ness or dis­abil­i­ty if, before the action, there is a rea­son­able expec­ta­tion that the employ­ee will return to work after the ill­ness or dis­abil­i­ty subsides.
  4. Invol­un­tary ter­mi­na­tion for cause, pro­vid­ed, how­ev­er, if the ter­mi­na­tion is due to gross mis­con­duct of the employ­ee, the loss of cov­er­age due to a ter­mi­na­tion of employ­ment for gross mis­con­duct will not result in an indi­vid­ual becom­ing eli­gi­ble for the subsidy

The notice is equal­ly spe­cif­ic about what is NOT invol­un­tary ter­mi­na­tion – and thus employ­ees in these sit­u­a­tions are NOT eli­gi­ble for the subsidy

  1. An employ­ee ini­ti­at­ed ter­mi­na­tion of employ­ment due to the employee’s child being unable to attend school or child­care facil­i­ty due to COVID. If, how­ev­er, the employ­er main­tains the abil­i­ty to return to work so that the event is a tem­po­rary leave of absence, then the employ­ee could qual­i­fy for the pre­mi­um sub­sidy as a vol­un­tary reduc­tion in hours
  2. An employ­ee ini­ti­at­ed ter­mi­na­tion of employ­ment due to gen­er­al con­cerns about work­place safe­ty (unless employ­ee can demon­strate that the employer’s actions result­ed in a change to the employ­ment rela­tion­ship anal­o­gous to a con­struc­tive discharge)
  3. Ter­mi­na­tion due to gross mis­con­duct (note – be care­ful here, as the def­i­n­i­tion of what con­sti­tutes gross mis­con­duct is extreme­ly narrow)
  4. Retire­ment, unless the facts indi­cate that the employ­ee was will­ing to work and knew the employ­er was plan­ning on ter­mi­nat­ing the employee
  5. Death of the employee