Thursday, March 5, 2009

Tip of the Day: See the new IRS info on claiming the COBRA subsidy

Effective this week, employers no doubt want to claim credit for the federal COBRA subsidy provided in the economic stimulus law. Here's help to do just that.

New information at includes questions and answers for employers and a revised version of Form 941, the quarterly payroll tax return employers will use to claim credit for COBRA premiums. The new form will also be sent to about 2 million employers in mid-March.

Under the new American Recovery and Reinvestment Act, COBRA-eligible employees are responsible for 35% of the cost of COBRA coverage. Employers can receive a credit for the other 65% after submitting:

* Documentation they received the employee’s 35% share of the premium.
* A copy of an invoice from the insurance carrier showing proof of payment.
* Declaration of the former employee’s involuntary termination.

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