The Internal Revenue Service (IRS) has released 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 payroll tax credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS reviewed elected officials eligibility for the premium subsidy. The important distinction is whether or not the elected official is considered involuntarily terminated. The IRS considered three situations, as follows:

1. An elected official who runs for reelection, but is not reelected is considered involuntarily terminated.
2. An elected official prohibited by term limits from running for reelection is considered involuntarily terminated.
3. An elected official who does not run for reelection, but is eligible to do so, is not considered involuntarily terminated, even if the elected official did not run due to illness.

Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.