Tonkon

Legal Updates & Alerts

The IRS and Department of Labor post forms, facts, and clarifications of changes to COBRA as a result of the American Recovery and Reinvestment Act of 2009

March 3, 2009
Last week, we notified you of the substantial changes to COBRA resulting from the American Recovery and Reinvestment Act of 2009 (the "Recovery Act"). The IRS and the Department of Labor ("DOL") have now posted additional information, relevant forms, posters, and questions and answers relating to the Recovery Act. The links to this information are provided below.

In these updates, the Department of Labor clarified that employers with fewer than 20 employees covered under state mini-COBRAs must comply with the Recovery Act's subsidy requirements and may claim reimbursement for the 65% share of the premiums. However, the extended election period for continuation coverage does not apply to these employers, thus relieving smaller employers of this administrative burden.

The IRS also has clarified that no additional information relating to the subsidy needs to be submitted other than what is requested in Form 941. However, even though employers are not required to submit additional information to the IRS, they must maintain supporting documentation for the credit, including an attestation of involuntary termination, proof of an assistance eligible individual's ("AEI") eligibility and election of COBRA, information on the receipt of AEI's payment of the 35% share of the premium, payment of the full premium, a record of the social security numbers of all AEIs, and other documentation necessary to verify the correct amount of reimbursement.

Please review these links carefully. If you have any questions or concerns, contact Blerina Kotori at 503.802.2055 or blerina.kotori@tonkon.com, or Darcy Norville at 503.802.2036 or darcy.norville@tonkon.com.

Form 941 for claiming the payroll tax credit:
http://www.irs.gov/pub/irs-pdf/f941.pdf

Instructions for Form 941:
http://www.irs.gov/pub/irs-pdf/i941.pdf

IRS Q&As:
http://www.irs.gov/newsroom/article/0,,id=204708,00.html

IRS News Release:
http://www.irs.gov/newsroom/article/0,,id=204709,00.html

DOL's webpage, FAQs, posters, and flyers:
http://www.dol.gov/ebsa/COBRA.html