New COBRA subsidy guidance from IRS

The IRS recently informally explained how to claim the payroll tax credit on the COBRA premium subsidy when a payment is made in 2010 for 2009 coverage. According to the IRS, if an assistance eligible individual (AEI) pays his or her 35 percent of the premium for some period of 2009 coverage in 2010, the employer must take the payroll tax credit during the quarter in 2010 during which it was received, or during a later quarter. The credit may not be claimed for the quarter during 2009 that corresponds to the period of coverage. (Source: IRS COBRA Questions and Answers: Reporting and Documentation (online Q&A RD-6, posted 1/20/10).)

Tips:
In other COBRA news, the U.S. Department of Labor has released model notices for use in notifying AEIs of their rights under the extended COBRA premium subsidy. Also, see our Legal Guide, “COBRA Provisions of the American Recovery and Reinvestment Act of 2009” (6015)