COBRA subsidy

Our company recently sold our share of a plant in another State.  Since there are new owners, there is someone else handling pay and the funds for it, so we've initiated terminations on all the employees that we were paying.  Under the COBRA IRS rules (, would the employees that were originally on our payroll be eligible for the COBRA subsidy?   


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  • The bigger question is whether it would be your company our the buyer who provides the COBRA. It's a complicated area, and the IRS says it depends on the facts and circumstances of the case. This is something you should talk over with your attorney.


     How will the COBRA credit apply in the case of a business acquisition that
    results in a successor employer?

    A. There is no “one size fits all” answer because the result depends on the
    facts and circumstances, including whether the entity that provided the subsidy
    continues in existence. The fact that an employer is a successor employer for
    purposes of applying the social security wage base does not mean that it can
    claim credit for the subsidy provided by the predecessor employer.

  • I'm confused.  Why would the new owners provide COBRA?  As far as I know, the new owners haven't even thought that far ahead and there are no benefits available to the full time staff now. 
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