New guidance from the Internal Revenue Service answers more questions that have been raised about the federal COBRA premium subsidy.Under that subsidy, included as part of a broader economic stimulus bill President Barack Obama signed in February, the federal government pays 65% of COBRA premiums for employees involuntarily terminated from Sept. 1, 2008, through Dec. 31, 2009. The subsidy is available for up to nine months.
The IRS in prior guidance resolved major questions employers and others had raised about eligibility for the subsidy. As new questions arise, the IRS is answering them through periodic additions to its guidance, which is in question-and-answer format.
In the latest guidance, the IRS makes clear that employees called up from the reserves for active military service would be considered involuntarily terminated and thus eligible for the subsidy, assuming they opt for COBRA.
“This is the case regardless of whether the civilian employer treats the employee’s absence as a termination of employment or a leave of absence,” the IRS said.