Learn more about Employee Benefits and Executive Compensation at Schiff Hardin. Attorneys In This Practice Suzanne M. Arpin Lauralyn G. Bengel Randolph R. Smith Jr. Edward Spacapan Jr. Margaret A. Strothkamp B. Frank Thorn David H. Williams Schiff Hardin Offices One Atlantic Center, Suite 2300 1201 West Peachtree Atlanta, GA 30309 225 Franklin Street, Suite 2600  Boston, MA 02110  6600 Sears Tower 233 S Wacker Drive Chicago, IL 60606 One Westminster Place Suite 200 Lake Forest, IL 60045 900 Third Avenue New York, NY 10022 One Market, Spear Tower 32nd Floor San Francisco, CA 94105 1666 K Street, NW Suite 300 Washington, DC 20006 - - - - - - - - - Join our mailing list. Forward this alert to a friend or colleague. - - - - - - - - -

Schiff Hardin Employee Benefits and Executive Compensation Group Update

COBRA Subsidy Update — New COBRA Forms

In February, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA) which, among many other things, expands COBRA rights and offers a government subsidy to certain COBRA-eligible individuals. (For more information on ARRA and its impact on COBRA, please see our recent Labor and Employment update, "New Federal Government Program: COBRA Subsidies".) The U.S. Department of Labor (DOL) recently issued new model COBRA notices as required under ARRA. The Internal Revenue Service (IRS) also issued an updated Form 941 that allows employers to claim payroll tax credit for the subsidized portion of COBRA premiums that such employers pay.

New Model Notices

The DOL has issued four different model COBRA notices that employers may choose to use.

1. Extended Election Period Notice: No later than April 18, 2009, employers must provide this notice, or its equivalent, to individuals who became eligible to receive COBRA on or after September 1, 2008 and who either did not originally elect COBRA coverage or who elected such coverage but did not maintain it.
2. Abbreviated General Notice: No later than April 18, 2009, employers must provide this notice, or its equivalent, to individuals who became eligible to receive COBRA on or after September 1, 2008 and who elected such coverage and continue to maintain it.
3. General Notice (full version): Employers must provide this notice, or its equivalent, to individuals who become eligible to receive COBRA on or prior to December 31, 2009 and have not yet received any prior COBRA notice.
4. Alternative Notice: This notice is intended for use by small employers who are not required to comply with COBRA but are subject to state laws that require continued health insurance coverage after an individual otherwise would have lost such coverage.

The notices are posted at http://www.dol.gov/ebsa/COBRAmodelnotice.html.

Revised Form 941 - Claiming the Tax Credit

The IRS has revised Form 941 (Employer's Quarterly Federal Tax Return) so an employer may claim a payroll tax credit for the 65% subsidy the employer pays toward individuals' COBRA premiums. In order to claim the credit, the employer must first have actually received the individuals' portion of the COBRA premiums. The employer may take the credit only for the amounts that it has paid or contributed toward the COBRA premiums, excluding amounts the individuals paid. The revised Form 941 is posted at http://www.irs.gov/pub/irs-pdf/f941.pdf.

Please contact your Schiff Hardin LLP attorney or any of the individual attorneys listed in this document if we can be of any assistance as you begin to implement these new COBRA requirements.

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ABOUT SCHIFF HARDIN LLP

Schiff Hardin's Employee Benefits and Executive Compensation Group works with clients to determine which retirement and health/welfare benefits plans best suit their needs, and assists in the design and implementation of all types of stock-based plans, deferred compensation and employment arrangements. Our counseling extends to analyzing benefit formulas, investment alternatives and procedures, and issues of securities law and fiduciary concerns.

For more information, please feel free to contact us.