The Internal Revenue Service released new detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees.
Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35% of the cost of COBRA coverage. Employers have to pay the remaining 65% but are entitled to a credit on their payroll tax return.
You must have supporting documentation for the credit claimed, including:
- Documentation of receipt of the employee’s 35% share of the premium.
- For insured plans, a copy of an invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier.
- Declaration of the former employee’s involuntary termination.
Also, the IRS announced that Form 941, Employer’s Quarterly Federal Tax Return, will be sent to about 2 million employers in mid-March. The form is used to claim the new COBRA premium assistance payments credit, beginning with the first quarter of 2009.
For more information about COBRA payments and the new law, go to:
www.irs.gov/newsroom/article/0,,id=204708,00.html
www.irs.gov/newsroom/article/0,,id=204505,00.html
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