Vision Payroll

Do you have former employees eligible for the COBRA continuation coverage premium subsidy? Do you need to know how to enter the premiums paid so that you may claim the credit on your Form 941, Employer’s QUARTERLY Federal Tax Return? Do you have questions on how the credit will be applied? This week’s Tip of the Week guides you through all this and more.

Under 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 COBRA continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed. Earlier posts discussed the requirements and mechanics of the credit. Click the COBRA tag to learn more. This post assumes that you have made eligible premium payments and now need to initiate the process to claim the credit on Form 941.

First, contact Vision Payroll and ask for a full overwrite. You should plan for us to do this immediately after your payroll has been processed. Locate the former employee for whom the payment was subsidized and select the employee’s Manual Adjustment Screen. If the premiums subsidized were for a single plan, choose code FS, otherwise choose code FM. Enter the 65% subsidy as a credit amount, e.g., -200.00. Key 0.00 in the Check Amount field—this is a mandatory step. Save the adjustment and you’re finished.

If the credits are less that that payroll’s Form 941 tax deposit, Vision Payroll will deposit the net amount. If the credit is greater than that payroll’s Form 941 tax deposit, Vision Payroll will reduce the amount of the claimed credit to exactly offset that payroll’s deposit and carry-forward any balance to the next payroll to reduce that payroll’s deposit.

Contact Vision Payroll if you have any questions on the COBRA continuation coverage premium subsidy.

This week’s question comes from John, an HR Director. We need to send COBRA notices to terminated employees. Are model notices available for the COBRA premium reduction? Answer: 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. The US Department of Labor recently announced the availability of model notices for use in four different situations.

The first notice is the General Notice (full version). Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event, AND who either have not yet been provided an election notice or who were provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA. This full version includes information on the premium reduction as well as information required in a COBRA election notice.

The second notice is the General Notice (abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it.

The third notice is the Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States, and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.

The final notice is the Notice in Connection with Extended Election Periods. Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual 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 COBRA model notices.

Need to learn more about the changes in COBRA changes mandated by the American Recovery and Reinvestment Act of 2009, but unable to attend next week’s seminar presented by Vision Payroll. Take the next best step by reviewing this month’s featured article by the HR Pros at MyHRSupportCenter, The American Recovery and Reinvestment Act of 2009 (ARRA) and New COBRA Changes.

This month’s article highlights the changes required by the law, reviews some key provisions, and sets an action plan with recommended next steps. One of those steps is to review The American Recovery and Reinvestment Act (ARRA) of 2009 and the Impact on COBRA Guide (the Guide) also produced by the HR Pros at MyHRSupportCenter. The Guide contains more comprehensive information on the changes and series of FAQs to guide you in implementing the required changes. The Guide can be found by searching “arra” from the Essentials, Guides page.

There are still a few seats available for next week’s COBRA seminar presented by John P. McMorrow, Esq. of Mirick O’Connell and the staff of Vision Payroll. Contact Vision Payroll today to reserve your seat.

To learn more, sign into MyHRSupportCenter and read this month’s featured article. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Please join us on Thursday, March 19, 2009 for a seminar on changes mandated by the American Recovery and Reinvestment Act of 2009. These changes affect virtually every employer in Massachusetts and many others nationwide. Attorney John P. McMorrow of Mirick O’Connell will talk on What Employers Need to Know about the New COBRA Rules. Employees of Vision Payroll will then discuss how the COBRA change will be handled mechanically as well as other changes in the payroll and HR area required by the Act.

There is no charge for this seminar, but advanced registration is required. Space is limited so registrations will be accepted on a first-come, first-served basis.

Date:  March 19, 2009

Time:  Registration starts at 8 am, presentation starts at 8:30 am

Place: Woodblock Building Conference Room, 14 Monument Square, Leominster

Free parking is available in the lot behind the building. Entry is in back. Refreshments will be served.

We expect the seminar to run 1½ to 2 hours, but Vision Payroll employees will stay longer to answer questions as necessary.

RSVP to Vision Payroll.

The American Recovery and Reinvestment Act of 2009 (the Act) made changes to continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA. Employers are required to pay sixty-five percent of the premiums for certain eligible individuals, but may claim a credit on Form 941, Employer’s QUARTERLY Federal Tax Return, for these premiums.

If you need to claim a credit for COBRA premiums paid, contact Vision Payroll and we’ll update your payroll with the appropriate tax codes so that you will receive proper credit on your Form 941. If your credit exceeds your liability, no tax deposit will be due for that period and you may receive a refund when you file your Form 941.

Over the next several days, Vision Payroll will be posting additional articles on changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.

The American Recovery and Reinvestment Act of 2009 (the Act) made changes to continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA. Here are five fast facts on the changes related to employers:

1. Employers are required to pay the additional sixty-five percent of the premiums not paid by employees.
2. Employers may claim a credit on Form 941, Employer’s QUARTERLY Federal Tax Return, for their share of the COBRA premiums.
3. Payment of the premium subsidies by employers and the credits on Form 941 happen only after employees have paid their share of the premiums.
4. Supporting documentation for the credit must be maintained by employers, but need not be submitted with the Form 941.
5. Employers are required to pay the subsidy for eligible employees covered under COBRA or similar state laws.

Over the next several days, Vision Payroll will be posting additional articles on implementing the changes to COBRA continuation coverage required by the Act as well as other changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.

The American Recovery and Reinvestment Act of 2009 (the Act) made changes to continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA. Here are five fast facts on the changes related to employees:

1. The law became effective February 17, 2009 and applies to qualifying events occurring after August 31, 2008 and before January 1, 2010.
2. Involuntarily separated workers who elected COBRA continuation health coverage are only required to pay thirty-five percent of the required premiums.
3. Eligible individuals who did not elect COBRA coverage because it was unaffordable have sixty days to elect COBRA coverage.
4. The subsidy phases out for individuals with modified adjusted gross income over $125,000 and when modified adjusted gross income exceeds $145,000 individuals are no longer eligible. Those numbers increase to $250,000 and $290,000 for taxpayers filing joint returns.
5. The subsidy may last for up to nine months.

Over the next several days, Vision Payroll will be posting additional articles on implementing the changes to COBRA continuation coverage required by the Act as well as other changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.

This week’s question comes from Doug, head of HR. I heard that the new tax law will impact employees eligible for COBRA. How does the American Recovery and Reinvestment Act of 2009 (the Act) change COBRA continuation health coverage? Answer: Under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA, certain former employees are allowed to continue health care coverage under their former’s employer’s group plan. The former employees must pay the cost of the health care premiums.

The Act made significant changes to COBRA continuation coverage. Under the Act, certain covered employees are required to pay only thirty-five percent of the premiums and their former employers must pay the remaining sixty-five percent. Employers may claim a credit on Form 941, Employer’s QUARTERLY Federal Tax Return, for the premiums paid for eligible employees.

The Internal Revenue Service recently released an updated Form 941 to reflect this law change and will soon release other updated forms, such as Form 941-X Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.

Over the next several days, Vision Payroll will be posting additional articles on implementing the changes to COBRA continuation coverage required by the Act as well as other changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.

As employers consider layoffs as one alternative during these tough economic times, the HR Pros at MyHRSupportCenter have chosen this month to review some of the laws which employers must comply with when planning and implementing layoffs. This month’s featured article discusses the Worker Adjustment and Retraining Notification Act (WARN), the Older Workers Benefits Protection Act (OWBPA), the Americans with Disabilities Act (ADA), and the Consolidated Omnibus Budget Reconciliation Act (COBRA). To learn more, sign into MyHRSupportCenter and read this month’s featured article. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.