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.