The new economic stimulus law subsidizes the cost of continuing COBRA medical coverage for some employees who have lost, or will lose, their jobs. But the burden of paying the rest of the premiums has shifted to employers.
Strategy: Recoup the cost ASAP. If your business is required to pick up the slack for premium payments, it can claim a special tax credit on the quarterly employment tax return (Form 941). Alternatively, you can reduce employment tax deposits by the amount of the subsidy payments.
The IRS has issued initial guidance on the new COBRA premium assistance credit. (IRS News Release IR-2009-15)
Here’s the whole story: COBRA (Consolidated Omnibus Budget Reconciliation Act) allows an employee who is terminated from employment to continue employer-provided health insurance coverage for up to 18 months. The law extends the maximum continuation period to 29 months for an employee who suffers a disability;...(register to read more)
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