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 employers, multiemployer plans, and insurers are not required to report on Form W-2 or Form 1099 any premium subsidies provided to Assistance Eligible Individuals (AEIs). They are requited to keep records and supporting documentation for any such payments to AEIs and to support any credit claimed on Form 941. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.