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4/9/2009, 03:43 PM
American Recovery and Reinvestment Act of 2009
COBRA Assistance (ARRA Sec. 139C, Sec. 3001, Sec. 6432 and Sec. 6720C)
Under the ARRA, eligible former employees (those involuntarily separated from service between September 1, 2008, and December 31, 2009) who participated in their employer's health plan at the time they lost their jobs must pay only 35% of the cost of COBRA coverage. The employer-borne portion of the COBRA cost is not included in the former employee's gross income. The COBRA subsidy phases out for individuals with modified adjusted gross income (AGI) between $125,000 and $145,000. The phase-out range for those filing jointly is $250,000 to $290,000.
Employers must treat the 35% payment by these former employees as full payment and pay the other 65% themselves. On its payroll tax return, the employer can claim a credit for that 65%.
COBRA Assistance (ARRA Sec. 139C, Sec. 3001, Sec. 6432 and Sec. 6720C)
Under the ARRA, eligible former employees (those involuntarily separated from service between September 1, 2008, and December 31, 2009) who participated in their employer's health plan at the time they lost their jobs must pay only 35% of the cost of COBRA coverage. The employer-borne portion of the COBRA cost is not included in the former employee's gross income. The COBRA subsidy phases out for individuals with modified adjusted gross income (AGI) between $125,000 and $145,000. The phase-out range for those filing jointly is $250,000 to $290,000.
Employers must treat the 35% payment by these former employees as full payment and pay the other 65% themselves. On its payroll tax return, the employer can claim a credit for that 65%.