UPDATE ON COBRA SUBSIDY
As previously discussed on this blog, part of the Economic Stimulus Package passed by Congress provides for a 65% government subsidy for eligible workers toward their COBRA coverage. On February 26, 2009, the IRS released new guidelines to help employers with the task of administering these benefits. The guidelines are Form IR 2009-15. You can find it on the IRS’s website at www.irs.gov. The website also contains a frequently asked questions update on this topic, as well as a revised Form 941, which is the form employers use to claim credit for COBRA medical premiums paid on behalf of former employees. A hard copy of the form will be sent to employers by the IRS later this month.
Employers seeking credit for the cost of the subsidy must maintain various forms of supporting documentation including the following:
• Information showing receipt of the former employee’s 35% portion of the premium;
• If you have a health insurance plan from a carrier, a copy of the invoice and proof of payment of the premium to the carrier;
• If your plan is self-insured, proof of the premium amount and proof of the coverage given to the terminated employee;
• A statement confirming that the covered employees were terminated involuntarily;
• Proof that the former employee claiming a subsidy was properly eligible for COBRA between September 1, 2008 through December 31, 2009;
• A record identifying all covered employees by social security number, the amount of subsidy reimbursed to each covered employee, and whether the subsidy was for one or more family member.
Dirk A. Beamer
Know Your Business. Grow Your Business. Protect Your Business