As of August 25, 2009, the IRS has posted on their website Headliner Volume 274 consisting of a reminder that any COBRA subsidy recipient with other coverage must submit notification of that coverage or face a penalty.
If COBRA subsidy recipients later become eligible for other group health plan cover or Medicare, the recipients must notify their plan in writing that they are no longer eligible for the subsidy. Otherwise, the recipients can be penalized. The penalty for non-notification can be 110% of the subsidy provided after the recipient becomes eligible for the other coverage.
Included in the reminder are instructions for individuals to self-report to the IRS that they are subject to the penalty. Also, the reminder notes that anyone who suspects that someone may be receiving the subsidy after becoming eligible for other coverage may submit Form 3949-A (Information Referral) to report the lack of notification.
Group health plans should include the form recipients are required to submit with the DOL notice advising the individuals of their right to subsidized COBRA premium payments.
To read Headline Volume 274, click here.
The COBRA subsidy is authorized by the American Recovery and Reinvestment Act of 2009 (ARRA). Click here to view section 3001 of the American Recovery and Reinvestment Act of 2009 (ARRA), Public Law 111-5, enacted February 17, 2009, relating to premium assistance for COBRA continuation coverage.
