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Regulation and Compliance > Federal Regulation > IRS

IRS Posts COBRA Answers

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The Internal Revenue Service has released more advice about how to interpret the new health benefits continuation rules.

The guidance, given in IRS Notice 2009-27, relate to the American Recovery and Reinvestment Act provisions that create a 65% government subsidy for involuntarily terminated employees who choose to continue employer-sponsored group benefits through the Consolidated Omnibus Budget Reconciliation Act benefits continuation provisions or similar state benefits contiuation provisions. The employees must pay the rest of the cost of the coverage premiums.

Some of the questions and answers in the COBRA guidance deal with the definition of “involuntary termination.”

In some cases, for example, involuntary terminations could include termination for cause, if the termination is not “due to the gross misconduct of the employee,” IRS officials write in the guidance.

If an employer lays off an employee is out on leave, that also could count as an involuntary termination, officials write.

Other topics addressed include the details of who exactly qualifies as an “assistance eligible individual,” calculation of the premium reduction and the types of coverage eligible for the premium reduction program.

COBRA continuation premium reductions are available for dental-only and vision-only plans, health reimbursement arrangements and, in some cases, retiree health coverage, officials write.

A copy of the guidance is available here.


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