Vision Payroll

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 credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS stated that if an insurer is providing continuation coverage under a comparable state law, the coverage still qualifies for premium subsidy even if the group health plan has terminated after the employer has gone out of business. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

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 credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS stated that when an employer voluntarily provides continuation coverage when the plan is not subject to “COBRA continuation coverage”, then the subsidy does not apply to the voluntary coverage. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

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 credit on their Form 941 to be reimbursed for the assistance provided.

In recently issued guidance, the IRS stated that when an employer makes a “reasonable interpretation of the applicable statutory provisions and IRS guidance” while determining that an employee was involuntarily terminated, the IRS won’t challenge the determination for purposes of deciding if the employer is entitled to the COBRA premium reduction credit. The employer is required to maintain the supporting documentation to support the determination. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.

The Internal Revenue Service (IRS) has updated its instructions for Form 941, Employer’s QUARTERLY Federal Tax Return. Using the new guidance, employers are now instructed to report on line 12a “65% of the COBRA premiums for assistance eligible individuals” (AEIs). Previously, employers were instructed to report “COBRA assistance payments [they] made.” Also, the IRS clarified that when entering the number of AEIs provided COBRA premium assistance, reach AEI who paid a premium should count as one individual even if the premium was for a policy that covered more than one AEI. Contact Vision Payroll if you have any questions on the revised Form 941 reporting instructions.

This week’s question comes from Rosa, a business owner. I paid over $5,000 in premiums for former employees who are eligible for the COBRA premium subsidy. The reduction in the federal tax deposit was only about $3,000. Why is my COBRA credit limited? Answer: 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 credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll will limit the amount of the credit utilized to offset any particular payroll’s liability to the total of the federal tax deposit for that payroll. Credits in excess of that payroll’s federal tax deposit will be limited and the overage will be used to offset future liabilities for that quarter, unless the payroll is the last of the quarter. Contact Vision Payroll if you have any questions on the COBRA premium subsidy.

The Internal Revenue Service (IRS) recently released an advance copy of 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 credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Additional Issues under Notice 2009-27.

The IRS indicated in Notice 2009-27 that it is aware of additional issues not addressed in Notice 2009-27. The IRS and the US Department of the Treasury are still considering these issues and may issue future guidance on them.

This concludes our summary of Notice 2009-27. Contact Vision Payroll if you have any questions on Notice 2009-27.

The Internal Revenue Service (IRS) recently released an advance copy of 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 credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Comparable State Continuation Coverage.

Individuals who would otherwise be eligible under Federal COBRA may also qualify under comparable state laws that provide for continuation coverage for those who may not qualify under Federal COBRA. The fact the state plan has a different period of continuing coverage, different qualifying events, different qualified beneficiaries, or different maximum premiums generally does not mean the plan is not “comparable solely for those reasons.”

For plans subject solely to state law that require the insurer to provide continuation coverage, only the insurer may claim the premium reduction credit, even if the employer collects the reduced premium and pays the full premium to the insurer. The IRS left open the possibility that future guidance may change this conclusion.

The next topic covered will be Additional Issues. Contact Vision Payroll if you have any questions on Notice 2009-27.

The Internal Revenue Service recently released an advance copy of 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 credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Payments to Insurers under Federal COBRA under Notice 2009-27.

For plans subject to COBRA that are not multiemployer plans and for which the insurer collects the premiums directly from the qualified beneficiaries, the insurer is required to treat the payment of 35% of the premium by assistance eligible individuals as payment of the full premium, regardless of when the employer pays the remaining 65% of the premium. Failure to do so may subject the employer to the excise tax under §4980B(e)(1)(B) of the Internal Revenue Code of 1986.

The next topic covered will be Comparable State Continuation Coverage. Contact Vision Payroll if you have any questions on Notice 2009-27.

The Internal Revenue Service recently released an advance copy of 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 credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Extended Election Period under Notice 2009-27. Most of the issues covered in this topic unless otherwise indicated “apply only for purposes of Federal COBRA and temporary continuation coverage under” Federal Employees Health Benefits Program (FEHBP).

Employees who elected self-only coverage and were involuntarily terminated after August 31, 2008 and before February 18, 2009 are allowed an extended election period to elect coverage for a spouse and dependent children who are qualified beneficiaries and eligible for premium reduction.

COBRA continuation coverage begins with the first period of coverage after February 16, 2009 for coverage elected during the extended election period. For plans that require coverage to be paid for on a calendar month, March 2009 is the first period of coverage eligible for premium reduction. This is true even if the plan requires employees to pay a pro-rata portion of the February 2009 premium. If, however, the plan requires coverage to be paid for on a monthly period based on the last day of coverage, the first period of coverage could be different. Assuming the last day of coverage were October 3, 2008, the first period the employee would be required to pay for would be October 4, 2008 through November 3, 2008. The first period of coverage beginning after February 16, 2009 would be March 4, 2009 through April 3, 2009.

Employees who still had open COBRA elections as of February 17, 2009 may forego coverage under the initial election and elect only under the extended election period. Employees who do so need pay for COBRA continuation coverage for coverage periods after February 16, 2009. Employees who elect under their original COBRA election period would only be eligible for premium reduction for periods of coverage after February 16, 2009.

For most purposes, the extended election period is available only to plans subject to Federal COBRA or FEHBP. The extended election period does not apply to state plans that provide comparable coverage. State programs that allow a similar extended election would result in premium reduction for assistance eligible individuals (AEIs).

Qualified beneficiaries with health reimbursement arrangement (HRA) coverage “have access to the same level of COBRA continuation coverage as was available immediately before the qualifying event.”

AEIs that were eligible for other group coverage before February 17, 2009 but unable to enroll in group health coverage after February 16, 2009 are eligible for the premium reduction until they are eligible to enroll in another plan or until the premium reduction period ends.

A plan cannot require payment of the initial premium under the extended election period coverage “earlier than 45 days after the date on which the election of Federal COBRA under the extended election period is made for that qualified beneficiary.”

The next topic covered will be Payments to Insurers under Federal COBRA. Contact Vision Payroll if you have any questions on Notice 2009-27.

The American Recovery and Reinvestment Act of 2009 (ARRA) made changes to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation health coverage. In certain situations, employers must pay 65% of the continuation premium and take a credit on Form 941, Employer’s QUARTERLY Federal Tax Return. Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (AEI) (or any individual who would be an AEI if a COBRA continuation election were in effect) who:

1. Had a qualifying event at any time from September 1, 2008 through February 16, 2009; and
2. Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA.

This notice includes information on ARRA’s additional election opportunity, as well as premium reduction information. This notice must be provided by April 18, 2009.

Contact Vision Payroll if you have any questions on the Notice in Connection with Extended Election Periods.