IRS Issues Revised Form 941 and Instructions for COBRA Premium Subsidy
02/23/2009The recently enacted American Recovery and Reinvestment Act of 2009 (ARRA) includes a 65 percent subsidy for COBRA premiums paid by qualified beneficiaries who lose group health plan coverage because of a covered employee’s involuntary termination of employment at any time from September 1, 2008, through December 31, 2009. For a period of up to nine months, an “assistance-eligible individual” is treated as having paid his or her COBRA coverage in full if the individual actually pays 35 percent of the applicable premium. The remaining 65 percent of the premium is subsidized by the government via a payroll tax credit. The Internal Revenue Service has recently updated Form 941 (Employer’s Quarterly Federal Tax Return) to include instructions for claiming the payroll tax credit for the COBRA subsidy. Click here to view the form and instructions. More information on this issue can be found in McDermott Will & Emery’s White Paper “The COBRA Premium Subsidy Law: Understanding Your Compliance Obligations.”
