Additional provisions for Assistance Eligible Individuals (AEIs) include:
The premium assistance provisions also affect employers.
Most importantly, the employer of the AEI must pay up to 65% of the premium to the insurer. The employer then gets credit for the amount of COBRA premium paid against payroll taxes. If the subsidy is greater than the tax liability, the excess amount is either paid to the employer or applied against future payroll taxes. The IRS has a website (www.irs.gov/newsroom/article/0,,id=204709,00.html) to help employers address COBRA premium assistance requirements.
Other provisions important to employers include:
- Form 941 (Employers Quarterly Federal Income Tax Return) has been revised to address the payroll tax credits.
- Plan administrators must communicate the availability of the subsidy to eligible COBRA beneficiaries by April 18, 2009.
- Employers must maintain documentation of the AEI’s 35% contribution and provide proof of payment to the insurer (if the plan is not self-insured).