IRS ISSUES GUIDANCE TO EMPLOYERS ABOUT NEW COBRA SUBSIDY
The Internal Revenue Service
has published further guidance for employers explaining how to obtain
reimbursement for the new employer-paid COBRA subsidy mandated by the American Recovery and Reinvestment Act of 2009. As we previously reported to you (
CM - 2/24/09),
the new law requires employers to fund 65% of eligible employees' COBRA
continuation premiums for up to 9 months. The guidance explains
that employers can claim the COBRA subsidy as a credit on their
quarterly employment tax return, IRS Form 941, which has been updated to allow for this credit.
According to the IRS guidelines, employers are not
required to provide any supporting documentation when filing Form 941,
but must retain all supporting documentation for the subsidy credit
sought. The pertinent supporting documentation identified by the
IRS includes:
- The dates of receipt and the amounts of each eligible individual's 35% share of the COBRA premium.
- In the case of an insured plan, a copy of the
invoice or other supporting statement from the insurer and proof of
timely payment of the full COBRA premium to the insurer.
- In the case of a self-insured plan, proof of
the premium amount and proof of the coverage provided to the assistance
eligible individuals.
- Verification of an individual's involuntary
termination, including the date of the involuntary termination for each
covered employee eligible for the subsidy;
- Proof of each assistance eligible
individual's eligibility for COBRA coverage at any time during the
period from September 1, 2008 to December 31, 2009, as well as the
individual's election of COBRA coverage.
- A record of the Social Security numbers
of all covered employees, the amount of the subsidy reimbursed with
respect to each covered employee, and whether the subsidy was for 1
individual or 2 or more individuals.
- Other documents necessary to verify the correct amount of reimbursement.
To access the IRS COBRA resource for employers, which also contains a link to the revised form 941 go to (
IRS).
Your contact at the Firm is ready to assist you if you have
any questions about this topic or wish to arrange for a payroll
practices audit and policy review in light of this new law.
