COBRA credit: How to claim what you’re due
February 27, 2009 by Carol KatarskyPosted in: April 15 2010, Best practices, Fringe benefits, Hiring & training staff, In this week's e-newsletter, IRS regs, Latest news & views, Tax compliance
IRS is moving quickly: Here are the details on how to claim the credit for COBRA premiums you’ll have to pay for recently laid-off workers. The COBRA credit was part of the recent stimulus package, but until now, we had no specifics on how employers could actually claim the credit. Here’s what you need to know now.
To claim the credit, you’ll need the proper documentation:
- Proof you received the employee’s share of the premium (35%)
- A declaration that the former employee was “involuntarily terminated,” and
- For insured plans, a copy of the invoice or similar statement from the insurance carrier, as well as proof the premium was paid on time.
You can claim your credit on Form 941, starting with the first quarter of ’09.
IRS has also released a new FAQ page for employers who need more details on the new procedure. If employees (or former employees) have questions about their rights and responsibilities, you can refer them to this page, which has several links to even more info.
Tags: Accounting, Best practices, Employee communication, Fringe benefits, IRS, Payroll, Resource, Tax compliance, Tax filing
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March 6th, 2009 at 1:39 pm
I would like to know if there is a definition of “involuntary termination”. Surely (?!?) the government would not require the employer to subsidize someone who was terminated for just cause.
March 6th, 2009 at 2:37 pm
The subsidy applies to any employee who was involuntarily terminated during the specified time period and is elgible for COBRA coverage. So, someone who quit, or someone who was fired for gross misconduct is not eligible for the subsidy. Pretty much everyone else is.
Hope this helps clarifiy things.
March 9th, 2009 at 12:17 pm
Thanks. Does help.
March 23rd, 2009 at 2:25 pm
I was laid off in January 2009; however, I am paying full price for my cobra. How do I get the 65% relief as an individual?
March 23rd, 2009 at 2:29 pm
Erin, Employers are supposed to get in touch with employees who are covered by the subsidy. If you haven’t heard from them, it can’t hurt to give them a call and find out what’s going on.
The links at the end of the article will take you to pages outlining both employer and employee information. Hope this helps.