Simply stated, it is sagacious to eschew obfuscation. - Norman Augustine
We don’t pretend to be experts in the administration of COBRA – the continutation of health insurance when an employee separates from the business or organization for which they were employed. We’ll leave that to others who are specialists. But with the new legislation, payroll companies like ours, became players. That’s because as part of the stimulus bill, employees who were involuntary terminated and who elected COBRA after September 1, 2008 may receive a 65% credit off their COBRA insurance. They get this credit from their employer who in turns receives the same credit on their payroll tax deposits (941 payments) which is then reflected on their quarterly payroll tax form (Form 941) – get all that?
As a payroll provider to such an employer, we need the ex-employee information and the amount the company paid on the employee’s behalf to cover their COBRA payment. We then add that information to the payroll we are running thereby reducing the amount the employer owes the IRS and reflecting this information on the Form 941.
It’s simple, yet complex. There is a labyrinth of questions that can complicated the process regarding employee eligibility, negative liabilities, overpayment by the company of the COBRA amount, etc. I would add that the administration of this benefit is yet another reason to outsource payroll. We keep up with the legislative changes on this issue, we work with multiple employers regarding this issue keeping us current on multiple fronts and we keep our systems up to date in order to insure complicance.
The eyes may roll up at yet another government change – but we’re there for you.
Sincerely,
Bryan Dear
www.payrolldept.biz
