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COBRA Premium Assistance Payments – Update for Employers Filing for Tax Credit

The IRS recently changed the filing process for employers who provide COBRA premium assistance payments to certain qualified beneficiaries.

 

The COBRA premium assistance payment applies to all group health plans subject to COBRA continuation requirements, including self-funded plans. Employers are required to pay 65 percent of the COBRA premium for covered individuals who experienced certain qualifying events (involuntary termination, or a reduction in hours followed by an involuntary termination) between September 1, 2008 and May 31, 2010. The qualified beneficiary pays the other 35 percent of the COBRA premium.

 

The IRS update provides that an employer can no longer claim the COBRA premium assistance payments as a credit on Forms 941, 943 or 944.Instead:

 

  • Form 941 filers- For tax periods beginning after December 31, 2013, an employer who files Form 941, Employer's QUARTERLY Federal Tax Return, must file Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, to get reimbursed for the COBRA premium assistance payments that the employer has provided to assistance-eligible individuals.
  • Form 943 filers- For tax periods beginning after December 31, 2013, an employer who files Form 943, Employer's ANNUAL Federal Tax Return for Agricultural Employees, must file Form 943-X, Adjusted Employer's ANNUAL Federal Tax Return for Agricultural Employees or Claim for Refund, to get reimbursed for the COBRA premium assistance payments that the employer has provided to assistance-eligible individuals.
  • Form 944 filers- For tax periods beginning after December 31, 2013, an employer who files Form 944, Employer's ANNUAL Federal Tax Return, must file Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund, to get reimbursed for the COBRA premium assistance payments that the employer has provided to assistance-eligible individuals.

 

Please contact your client relationship manager or Meritain Health representative if you have questions.

 

This document is being provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this publication and any attachments, Meritain Health is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is Meritain Health providing legal advice.