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 confirmed that members of military Reserve units and National Guard are considered involuntarily terminated if they are called to active duty. This is true whether the employer treats it as a termination of employment or a leave of absence. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.