BRAINTREE, MA, May 30, 2009
/24-7PressRelease/ -- help businesses throughout New England understand the new provisions.
"The IRS recently issued additional guidance relating to the COBRA provisions adopted in the ARRA. In general, the new provisions provide a 65 percent subsidy for COBRA continuation premiums for up to nine months for workers who have been involuntarily terminated, and their families," according to Tom Astore, CPA, JD, Tax Manager at Rodman & Rodman (http://www.rodmancpa.com)
Astore noted that these rules apply to group health plans that are subject to the Federal COBRA continuation coverage requirements or to similar requirements under State law.
So, if a company has such a plan, and receives a 35 percent payment from someone eligible for the subsidy, it must make the remaining 65 percent premium payment. However, the company is not "out of pocket" for this cost because they can claim a payroll tax credit to offset this subsidy.
In order to qualify for premium assistance, a worker must:
· Be "involuntarily terminated" between Sept.1, 2008 and Dec. 31, 2009;
· Be eligible for COBRA coverage; and
· Elect such coverage.
The period of coverage ends on 12/31/2009 or on the date the terminated worker becomes eligible for coverage under any other group health plan or for Medicare benefits - whichever comes first. Companies must notify terminated workers of their right to a COBRA continuation coverage subsidy.
The subsidy is not taxable when received, but higher income recipients, such as those with modified adjusted gross income above $125,000 ($250,000 for joint filers) will have to pay back part or all of it at tax return time.
In most cases, an employer will be reimbursed for the subsidy by way of a federal payroll tax credit.
"As you can tell, these rules are complex. Employers can claim the payroll credit, but should consult their accountant on how to properly do so. Special rules will also apply; one example of this is if the employer includes health premiums as part of a severance package. Be sure to consult a professional for guidance," noted Astore.
For more information about COBRA provisions in ARRA, contact Rodman & Rodman, P.C. at (617) 965-5959.
Rodman & Rodman, P.C.
Founded in 1961, Rodman & Rodman, P.C. provides accounting, tax and business services to small and medium-sized companies throughout New England. With a focus on strategic planning, Rodman & Rodman goes beyond traditional accounting services and takes a proactive approach when serving clients to increase, preserve and sustain clients' financial net worth.
From business valuations, taxation, audits, fraud detection and prevention services and succession planning to a variety of accounting IT services including software selection, implementation and training, the team at Rodman & Rodman serves as comprehensive advisors to clients. For individual clients, the company offers personal advisory services such as planning for real estate transactions, obtaining financing, estate planning and retirement planning as well as planning for college education. Rodman & Rodman Certified Public Accountants are located at 3 Newton Executive Park in Newton and 25 Braintree Hill Office Park in Braintree, Mass. For more information, visit their website at http://www.rodmancpa.com or contact (617) 965-5959.
---
Press release service and press release distribution provided by http://www.24-7pressrelease.com# # #
Read more Press Releases from Jen Reading:Other Press Release Headlines:
