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No COBRA requirement for ineligible workers

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q. My company was forced to lay off some employees. Do we have to subsidize COBRA payments for married ex-workers? L.M.B., Santa Fe, N.M.

A.
Not necessarily. If a worker is involuntarily terminated from the job, the employer generally is required to pay 65% of the premiums needed to continue health insurance under COBRA for up to nine months. The employee has to pay only 35% of the cost. But no subsidy is required if the ex-worker is eligible for coverage under a spouse’s health insurance plan.

Note that this rule differs from the general application of COBRA, where a spouse still can elect to continue coverage and pay for it in full.

Tip: In any event, an employer may recoup its subsidized expenses through a special payroll tax credit or reduced payroll tax deposits.

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