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 explained that when insurers or multiemployer plans are entitled to claim the COBRA premium reduction credit, they should obtain a statement from the employee or the employee’s former employer. A properly completed form, Request for Treatment as an Assistance Eligible Individual may be used as the required statement and maintained along with the employer’s name and address. Barring “fraud, malfeasance or misrepresentation of a material fact” or knowledge of or reason to know of the same, the IRS will not challenge the treatment of the former employee by insurers and multiemployer plans as involuntarily terminated. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.