The IRS reminds employers that they can be reimbursed for the 65% they pay on former employee COBRA premiums by claiming a credit for the subsidy on Form 941, Employers QUARTERLY Federal Tax Return; Form 944, Employer’s ANNUAL Federal Tax Return; or Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees. Employers must maintain supporting documentation for the claimed credit, the IRS said.
The Department of Defense Appropriations Act of 2010 amended the American Recovery and Reinvestment Act to extend the eligibility period for the subsidy two additional months and the duration from nine to 15 months (see COBRA Subsidy Extension Passed). For assistance-eligible individuals whose nine months of subsidy had already ended, the new law also provides an extended period for the retroactive payment of their 35% share during a transition period.
Assistance-eligible individuals must be notified of the extension by February 17, 2010.
More information about the COBRA subsidy, including questions and answers for employers, employees, or former employees, is on the COBRA pages of IRS.gov.