IRS Clarifies COBRA Subsidy Rules

The COBRA Subsidy is continually evolving. In a notice published March 31, 2009, the IRS addresses a number of significant issues resulting from the new COBRA Subsidy. Most important, the new notice clarifies the term “involuntary termination” and how the COBRA premium reduction is calculated. For example, when an employee accepts a severance package rather than face the prospect of an announced reduction in force or when an employee quits rather than accept a position with significantly reduced hours, the termination of employment will be considered “involuntary” for purposes of the COBRA subsidy. Click here to read the full notice: http://www.irs.gov/pub/irs-drop/n-09-27.pdf.