Cobra reimbursement policy

[Guest sratnam]

The company I am working for has a policy where it reimburses exempt employees for their Cobra expenses. This covers the hire date until the employee is eligible for the company’s group plan. I was asked to submit an expense report with copies of my Cobra payments as proof. I received a check but it was grossed up. I ended up paying taxes on something I have already paid. Please let me know if this proper or if I should have them reverse the transaction and cut me an expense check.

Thanks

Satchi in CA

[oriecat]

If they grossed-up the check, then they paid the taxes for you. You're getting the same amount back, it shouldn't make much difference.

I have seen arguments for and against COBRA premiums to employees being taxable. I am not sure at this point. The IRS clarified in Pub 15-A that COBRA premiums for ex-employees are excludable, but it does not address current employees. Sounds like the employer is playing it safe.