The Internal Revenue Service is helping spread the word that the COBRA subsidy eligibility period has been extended to May 31.
Workers who lose their jobs during April and May might qualify for a 65 percent subsidy on their COBRA health insurance premiums. Last years stimulus bill, the American Recovery and Reinvestment Act, established the subsidy to help workers who lost their jobs as a result of the recession to maintain their employer-sponsored health insurance.
The Continuing Extension Act of 2010, enacted earlier this month, reinstated the COBRA subsidy, which had expired on March 31 (see Senate Passes Unemployment Extension). As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008, and May 31, 2010, may be eligible for a 65 percent subsidy of their COBRA premiums for a period of up to 15 months. In some cases, workers who had their hours reduced and later lost their jobs may also be eligible for the subsidy.
Employers must provide COBRA coverage to eligible individuals who pay 35 percent of the COBRA premium. Employers are reimbursed for the other 65 percent by claiming a credit for the subsidy on their payroll tax returns: Form 941, Employers Quarterly Federal Tax Return, Form 944, Employers Annual Federal Tax Return, or Form 943, Employers Annual Federal Tax Return for Agricultural Employees. Employers must maintain supporting documentation for the claimed credit.
For more information on the COBRA subsidy, click here.
Some people who are eligible for the COBRA subsidy also qualify for the health coverage tax credit and may want to choose the more generous HCTC benefit instead, the IRS noted. The HCTC pays 80 percent of health insurance premiums for those who qualify. For more information on the HCTC, click here.
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