May 08, 2009
Question of the Week: Why Is My COBRA Credit Limited?
Filed under: News
Vision Payroll

This week’s question comes from Rosa, a business owner. I paid over $5,000 in premiums for former employees who are eligible for the COBRA premium subsidy. The reduction in the federal tax deposit was only about $3,000. Why is my COBRA credit limited? Answer: 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 will limit the amount of the credit utilized to offset any particular payroll’s liability to the total of the federal tax deposit for that payroll. Credits in excess of that payroll’s federal tax deposit will be limited and the overage will be used to offset future liabilities for that quarter, unless the payroll is the last of the quarter. Contact Vision Payroll if you have any questions on the COBRA premium subsidy.


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