Under that subsidy, included as part of a broader economic stimulus bill President Barack Obama signed in February, the federal government pays 65 percent of COBRA premiums for employees involuntarily terminated from September 1, 2008, through December 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.
Also eligible for the subsidy are elected officials who lost re-election or couldn’t run for re-election because of term limits, the guidance notes. In addition, employees who are hired for only a limited period of time, such as a teacher hired for only one year, would be eligible for the subsidy.
“If an employee hired for a limited period works to the end of the period, is willing and able to continue employment, and terminates employment because of the failure of the employer to offer additional work, an involuntary termination occurs for purposes of the premium subsidy,” the IRS said.