Friday, April 10, 2009

Guidelines COBRA Subsidies

Take a look at's IRS Releases Guidance on COBRA Subsidies:

"The Internal Revenue Service has released eagerly anticipated guidance on the new federal COBRA premium subsidies available to employees who lose their jobs."

The guidance, released Tuesday, March 31, resolves numerous questions—such as clarification of situations when laid-off employees are entitled to the subsidy—that employers have been asking for since the subsidy legislation was signed into law in February.

The subsidy, included in a broad economic stimulus measure, is available to employees who are involuntarily terminated between September 1, 2008, and December 31, 2009. A 65 percent federal premium subsidy is provided to eligible beneficiaries for up to nine months, until they become eligible for coverage from a new employer or a spouse’s employer, or until they become eligible for Medicare.


Congress, eager to pass the legislation quickly, left the role of providing detailed guidance on the subsidy to the regulatory agencies, with the first major batch provided by the IRS in a question-and-answer format spanning 27 pages.

The most significant guidance—crucial for helping employers determine who is eligible for the subsidy and who is not—is defining what constitutes an “involuntary termination of employment” and then providing numerous examples of involuntary termination.