The Internal Revenue Service recently released an advance copy of Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to 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 Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Recapture of Premium Assistance under Notice 2009-27.
A plan cannot refuse to provide premium reduction to an assistance eligible individual (AEI), even if the AEI’s income is so high that premium reduction recapture applies. Only if the AEI has notified the plan that the permanent waiver of premium reduction has been elected. An AEI notifies the employer or other entity eligible for the reimbursement by means of a signed and dated notification of permanent waiver. The waiver is permanent and regardless of actual income level in 2009 or 2010, the individual is no longer eligible for premium reduction.