Do you have former employees eligible for the COBRA continuation coverage premium subsidy? Do you need to know how to enter the premiums paid so that you may claim the credit on your Form 941, Employer’s QUARTERLY Federal Tax Return? Do you have questions on how the credit will be applied? This week’s Tip of the Week guides you through all this and more.
Under the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their COBRA continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed. Earlier posts discussed the requirements and mechanics of the credit. Click the COBRA tag to learn more. This post assumes that you have made eligible premium payments and now need to initiate the process to claim the credit on Form 941.
First, contact Vision Payroll and ask for a full overwrite. You should plan for us to do this immediately after your payroll has been processed. Locate the former employee for whom the payment was subsidized and select the employee’s Manual Adjustment Screen. If the premiums subsidized were for a single plan, choose code FS, otherwise choose code FM. Enter the 65% subsidy as a credit amount, e.g., -200.00. Key 0.00 in the Check Amount field—this is a mandatory step. Save the adjustment and you’re finished.
If the credits are less that that payroll’s Form 941 tax deposit, Vision Payroll will deposit the net amount. If the credit is greater than that payroll’s Form 941 tax deposit, Vision Payroll will reduce the amount of the claimed credit to exactly offset that payroll’s deposit and carry-forward any balance to the next payroll to reduce that payroll’s deposit.
Contact Vision Payroll if you have any questions on the COBRA continuation coverage premium subsidy.