As part of the enormous stimulus package in the American Recovery and Reinvestment Act of 2009, the federal government included some relief for laid-off employees: COBRA Coverage Under ARRA. Some of the unanswered questions are starting to be answered.
The IRS has posted information: COBRA Health Insurance Continuation Premium Subsidy, with COBRA: Answers for Employers.
The COBRA subsidy amount is reimbursed as a tax credit. Employers should use the updated Form 941 (.pdf), Employer’s Quarterly Federal Tax Return, to report their COBRA premium assistance payments. So employers have to come out of pocket for the health insurance premiums for their “involuntarily terminated” employees, but get a reduction on their quarterly employment taxes. Line 12a on Form 941 (.pdf) is for the COBRA premium assistance payments.
The Department of Labor has put together a collection of information on COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act Of 2009. That site has more detailed information on employee eligibility.
- Title III – Premium Assistance for Cobra Benefits section of the ARRA (.pdf)
- COBRA Premium Reduction Fact Sheet from the Department of Labor
- IRS Form 941 – Employer’s Quarterly Federal Tax Return (.pdf)
- IRS Form 941 Instructions (.pdf)
- Job Loss Poster – Important Information Workers Need to Know to Protect their Health Coverage and Retirement Benefits from the Department of Labor (.pdf)