For more information on
current legislative issues...

Visit the RI State Council site
at http://ri.shrm.org

Visit the Governmental Affairs page on the SHRM web site at www.shrm.org/government/
 

Legislative Issues                                                   Last updated 2/25/2010

2/4/2010 - DOL Issues Model CHIP Notice

Employers Must Notify Employees of State Premium Assistance Opportunities for Group Health Coverage

The Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA"), enacted by President Obama last year, included a requirement that employers maintaining group health plans must notify their employees of potential opportunities for group health plan premium assistance through Medicaid and the Children's Health Insurance Program ("CHIP") in the States in which the employees reside. On February 4, 2010, the U.S. Department of Labor (DOL) issued a model Employer CHIP Notice that may be used for that purpose. The Employer CHIP Notice must be provided by employers that maintain group health plans in states (like RI) that provide medical assistance under a State Medicaid plan or children's health insurance program. In addition, the notice requirement applies regardless of whether the employer provides group health coverage directly or through insurance, reimbursement or otherwise.

Employers must provide the initial annual notice to its employees by the date that is the later of (1) the first day of the first plan year after February 4, 2010 (by January 1, 2011 for calendar year plans) or (2) by May 1, 2010. Further information on the notice requirements can be found on the DOL website, along with the link to the model notice.

Senate Passes Health Care Reform Bill on Christmas Eve Morning  

By a 60-39 vote, the Senate passed health care reform legislation (H.R. 3590) on Christmas Eve morning, December 24.  The bill would provide coverage to an additional 31 million Americans, implement sweeping health insurance industry reforms, and reduce Medicare spending nearly $500 billion.

The Senate and House must now reconcile their bills to produce compromise legislation. That process will be difficult because the bills contain several major differences, including: the design of health insurance exchanges, the structure of coverage mandates on employers, a public health insurance option in the House bill, new taxes on some health plans in the Senate bill, and a variety of special interest "deals" for certain states and constituencies. Lawmakers are hoping to send a final compromise bill to President Obama by the time he delivers his State-of-the-Union address in late January.

SHRM Position:

SHRM strongly supports strengthening and improving the current employer-based health care system, and the goal of providing all Americans with access to health care coverage.  The Senate bill contains some provisions that are compatible with SHRM’s health care reform principles, and some provisions that are not. (See previous article below.)

As a result, SHRM remains hopeful that the Senate and House can agree on a final bill that, on balance, includes reforms that are important to SHRM members.

More information on this topic will be coming from SHRM after the holidays -- watch this site or visit the SHRM web site at www.shrm.org.

COBRA Subsidy and UI Extension Clears Congress 0n 12/19

On Saturday, December 19, 2009, the U.S. Senate extended and expanded the COBRA subsidy program that was enacted under the American Recovery and Reinvestment Act (ARRA), and extended and expanded unemployment benefits through February 28, 2010.

The COBRA subsidy program extension would:

• Expand the ARRA’s COBRA premium subsidy period from nine to 15 months;
  
• Change the end date for eligibility for the subsidy from December 31, 2009, to February 28, 2010;
  
• Provide a retroactive period of 60 days (commences upon enactment) for payment of premiums for eligible individuals whose subsidy period expired on November 30, 2009;
  
• Require a special notice outlining these changes within 60 days to all eligible individuals on COBRA on or after October 31, 2009, or those who are terminated after this date; and
  
• Clarify the original COBRA subsidy program, noting that eligibility and notice is based on the timing of the qualifying event.

The bill also provides an extension and expansion of unemployment insurance (UI) benefits.

SHRM Federal Legislative Alert: VOTE NO on H.R. 3962 - Affordable Health Care for America Act

YOUR ASSISTANCE IS NEEDED!  Debate on comprehensive health care reform is at a crucial stage. The House of Representatives will consider H.R. 3962, the Affordable Health Care for America Act as early as this weekend. While SHRM strongly supports comprehensive health care reform that strengthens the employer-based system, promotes wellness programs and health promotion initiatives, strengthens the Employee Retirement Income Security Act (ERISA), increases purchaser and consumer access to cost and quality information and increases access to affordable health coverage, the House bill fails to achieve these goals.

Please contact your Representative today to urge a NO VOTE on H.R. 3962.

Background

On October 29, the Democratic leaders of the U.S. House of Representatives unveiled their long-awaited fix for the nation's health care delivery system. The bill, titled the Affordable Health Care for America Act (H.R. 3962), includes many provisions of interest to HR professionals.

Click HERE to review a side-by-side comparison of the House and Senate bills (PDF).

Specific provisions of concern to HR professionals include:

Wellness Programs – Unfortunately, H.R. 3962 does not include provisions to facilitate greater availability of wellness programs among employers and employees. In addition, the measure does not include meaningful cost, quality, or transparency provisions to ensure that both employers and employees have better access to health-related information.

Employer Mandate – The bill requires employers to provide and pay for "qualified" health care coverage or face an 8 percent payroll tax. Employers must pay 72.5 percent of the premium for individuals and 65 percent of the premium for families. In addition, even if an employer provides and pays for health insurance coverage for their workforce, that employer could still be subject to an 8 percent payroll tax if employees decline employer coverage because it is unaffordable – defined as more than 12 percent of the employee's income.

ERISA – H.R. 3962 would erode the Employee Retirement Income Security Act (ERISA) by applying state law remedies to employer purchased coverage in a health insurance exchange; prohibiting post-retirement reductions of retiree health benefits by group health plans, unless reductions are also made to active employees' health benefits; and requiring employer-sponsored plans to meet detailed federal requirements that will increase costs.

Public Plan – The bill also includes a public insurance plan option that raises serious concerns about cost-shifting to private plans. Inadequate reimbursement practices under Medicare and Medicaid has resulted in significant cost-shifting to private plans, increasing costs for both employers and employees.

SHRM's Position

SHRM is committed to achieving comprehensive health care reform that provides high quality, affordable health coverage to all Americans in a manner that strengthens the voluntary employer-based system. HR professionals realize that the current system, which has health care costs rising faster than inflation, is unsustainable. That is why SHRM has supported efforts to control costs. To meet this goal, SHRM supports public policy that achieves the following:

• Strengthens and improves the employer-based health care system;
• Encourages greater use of health prevention, promotion, and wellness programs;
• Strengthens the Employee Retirement Income Security Act (ERISA) to ensure a national, uniform framework for health care benefits;
• Reduces health care costs by improving quality and transparency;
• Ensures tax policy contributes to lower costs and greater access.

Action Needed

Please write your Members of Congress TODAY and urge them to oppose the Affordable Health Care for America Act.

If you are a member of SHRM, you can write your elected officials using HRVoice by following these steps:

1. Log onto HR Voice by clicking HERE and enter your member number and last name.
2. Under the heading "Take Immediate Action on these Hot Issues," click on: "VOTE NO on the Affordable Health Care for America Act (H.R. 3962)" and
3. Feel free to personalize your letters by including specific information about the organization you work for, your experiences in the workplace, and why this legislation would negatively impact your organization. Just place your cursor on the text of the letter where you would like to edit.

Senate Turns to SHRM on H1N1 Influenza Preparedness

On November 10, SHRM member Elissa C. O’Brien testified at the Senate Subcommittee on Children and Families hearing titled, "The Cost of Being Sick: H1N1 and Paid Sick Days." Click here to learn more.

Ms. O’Brien is Vice President of Human Resources at Wingate Healthcare in Needham, MA. She is a member of SHRM’s Special Expertise Panel on Labor Relations and a past President of HRM-RI.

Are You Ready for The Genetic Information Nondiscrimination Act?

"The Genetic Information Nondiscrimination Act" – or GINA – has been called "the first civil rights law of the 21st Century." The Act prohibits discrimination against individuals on the basis of their genetic information in both employment and health care.

SHRM is offering a 90-minute webcast to explain the law and its requirements.

Webcast Date:  November 20, 2:00 P.M. – 3:30 P.M. (ET)

Presenter:  Steven J. Pearlman, partner, Seyfarth Shaw LLP, and SHRM’s Government Relations staff

Recertification:  Hours: 1.5 hours (Strategic)

Click here to learn more

Revised EEOC Poster for GINA Compliance Is Available Online Now

Title II of GINA - Employment Provisions: The Equal Employment Opportunity Commission (EEOC) has approved a proposed final rule to implement the employment title of the Genetic Information Nondiscrimination Act (GINA). The proposed regulation notes that covered entities will be required to post notices in conspicuous places describing GINA's applicable provisions. The EEOC has published a notice revising its "Equal Employment Opportunity is the Law" poster to reflect changes required by the employment provisions of the GINA, which becomes effective on Nov. 21, 2009.

Who Must Post: Employment provisions in Title II of GINA will apply to the same covered entities as Title VII of the Civil Rights Act of 1964 whether or not the employer conducts genetic testing. The provisions will prohibit employers from discriminating against individual employees or job candidates on the basis of genetic conditions or predisposition to certain diseases even if an employer does not conduct genetic testing.

You may complay with the posting requirement by posting a supplemental poster alongside EEOC’s September 2002 "EEO is the Law" poster or OFCCP’s August 2008 "EEO is the Law" poster, or by posting the revised poster.

Request posters at: http://www1.eeoc.gov/employers/poster.cfm

SHRM Federal Legislative Alert: FMLA Military Leave Law Expanded

President Obama has signed into law the Fiscal Year 2010 National Defense Authorization Act (H.R. 2647). The new law includes an expansion of the recently-enacted exigency and caregiver leave provisions for military families under the Family and Medical Leave Act of 1993 (FMLA).

In January 2008, Congress amended the FMLA to provide:

• Exigency leave - up to 12 weeks of leave for urgent needs related to a reservist family member's (spouse, son, daughter, or parent) call to active service.
    
  • H.R. 2647 expands the exigency leave benefits to include family members of active duty service members. Under current law, only family members of National Guard and Reservists are eligible for “exigency leave.
      
• Caregiver leave - up to 26 weeks of unpaid leave to an employee to care for a family member (spouse, son, daughter, parent, or next of kin) who is injured while serving on active military duty.
    
  • H.R. 2647 expands the caregiver leave provision to include veterans who are undergoing medical treatment, recuperation or therapy for serious injury or illness that occurred any time during the five years preceding the date of treatment.

These previsions are effective upon enactment.

In addition to providing leave for military families, the FMLA provides unpaid leave for the birth, adoption or foster care placement of an employee's child, as well as for the "serious health condition" of a spouse, son, daughter, or parent, or for the employee's own medical condition. To be eligible for the leave, employees must work in organizations of 50 or more employees and work at least 1,250 hours in a 12-month period.

SHRM Legislative Alert: Court Rules Federal Contractors Must Use E-Verify Beginning September 8, 2009

On 8/26/09, a U.S. District Court issued a long-awaited decision in Chamber of Commerce of the United States of America v. Napolitano; a case in which SHRM, along with the U.S. Chamber of Commerce, American Council on International Personnel, HR Policy Association, and Associated Builders and Contractors, Inc., challenged the legality of a Bush Administration Executive Order requiring that federal contractors use E-Verify to check the employment eligibility of all newly hired employees, as well as all current employees directly working on a contract.
 
SHRM and the other plaintiffs challenged the legality of Executive Order 13464 and its implementing regulations arguing that it was neither legally justified nor practical for federal contractors to implement. Unfortunately, the court discounted the plaintiffs' arguments deciding the case in favor of the government and ruling that the regulation should go forward.
 
In the wake of the court's ruling, SHRM is reviewing its public policy options. However, absent an additional delay, the rule is scheduled to go into effect on September 8, 2009. This deadline means that most federal contracts awarded, as well as solicitations issued after September 8, 2009, must include a clause mandating use of E-Verify for all employees hired during the contract period and all existing employees assigned to perform work under the contract. The United States Citizenship and Immigration Services (USCIS) has published information and frequently asked questions on its website regarding application of the rule.
 
In order to help prepare SHRM members for implementation of the rule, SHRM is developing a compliance webcast which will be available soon. Information about the webcast will be distributed as soon as a date is selected.

To read the final rule,  click HERE.

To read the court's decision, click HERE.

For Companies Operating On The Web, New Data Security Regulations Have Broad Implications

Massachusetts' New Identity Theft Law (201 CMR 17.00)

Massachusetts has a new identity theft law and data encryption mandate that goes into effect January 1, 2010. This law applies to all businesses that “own, license, store or maintain personal information” on any Massachusetts resident. It also applies contractors and third-party vendors that access and work with this information.

Does your company have an online presence with national reach? Sales on the East Coast? Customers in Boston? If your company counts among its customers residents of Massachusetts, you have until March 1, 2010 to ensure that your data storage and transmission policies and practices are in compliance with new data security regulations issued by the State of Massachusetts.

Read more about this on the Bullivant Houser Bailey PC site (attorneys-at-law)

HRM-RI members who are interested in learning about how to comply with this law may register for a FREE 35 minute webinar being offered by Universal Benefit Plans.

Click here for more details on the HRM-RI site or visit www.universalbenefitplans.com

SHRM Federal Legislative Alert - Healthy Families Act Introduced

The Healthy Families Act has been introduced in the both the House (H.R. 2460) and Senate (S. 1152). Sponsored by Representative Rosa DeLauro (D-CT) and Senator Edward Kennedy (D-MA), the bill would require employers to provide employees with up to 56 hours of paid sick leave. SHRM believes a paid sick leave mandate as outlined in the Healthy Families Act would limit an employer's flexibility in designing a benefits package that meets the needs of their unique workforce, resulting in significant costs for employers as well as a potential loss to employees who prefer other benefits rather than paid sick leave. As such, we are opposed to the Healthy Families Act, as currently written.

Background

The Healthy Families Act (HFA) would require public and private employers with 15 or more employees to allow employees to accrue one hour of paid sick leave for every 30 hours worked. An employee begins accruing the sick leave at commencement of employment and is able to begin using the leave after 60 days. The paid sick time could be used for the employee's own medical needs or to care for a child, parent, spouse, or any other blood relative, or for an absence resulting from domestic violence, sexual assault or stalking. Other key provisions of interest to HR professionals include:
 
Coordination with Existing Federal and State Leave Laws: The HFA specifically states that the Act does not supersede any state or local law that provides greater paid sick time or leave rights. Sick leave required under the HFA would be in addition to any leave provided under the Family and Medical Leave Act or state workers compensation laws.
 
Effect on Existing Paid Leave Benefits: Under the HFA, if an employer's existing paid leave policy fails to meet all the requirements of the Act, the employer's plan would need to be amended to comply with the HFA requirements.
 
Impact on Absence Control or No Fault Attendance Policies: The HFA would prohibit an employer from counting any leave taken by an employee under the legislation from counting as leave under an employer's absence control or no-fault attendance policy.

SHRM Position

Rather than a one-size-fits-all government approach, where federal and state laws often conflict and compliance is determined under regulatory silos, SHRM advocates a comprehensive workplace flexibility policy that, for the first time, responds to the diverse needs of employees and employers and reflects different work environments, union representation, industries and organizational size.
 
SHRM has developed a comprehensive workplace flexibility policy that responds to the diverse needs of today's employees and employers. For a 21st century workplace flexibility policy to be effective, SHRM believes that all employers should be encouraged to provide paid leave for illness, vacation and personal days to accommodate the needs of employees and their family members. In return, employers who choose to provide paid leave would be considered to have satisfied all federal, state and local leave requirements.
 
For a 21st Century workplace flexibility policy to be effective, SHRM believes the policy must meet the following principles:

1. Shared Needs - The policy must meet the needs of both employees and employers. Rather than an inflexible government approach, policies governing employee leave should be designed to encourage employers to offer a paid leave program (i.e., vacation, sick time, personal days or “paid time off” (PTO) bank that meets baseline standards to qualify for a statutorily defined “\"safe harbor."
    
2. Employee Leave - Employers should be encouraged voluntarily to provide paid leave to help employees meet work and personal life obligations through the safe harbor leave standard.
    
3. Flexibility - A federal workplace leave policy should encourage maximum flexibility for both employees and employers.
    
4. Scalability - A federal workplace leave policy must avoid a mandated one-size-fits-all approach and instead recognize that paid leave offerings should accommodate the increasing diversity in workforce needs and environments.
    
5. Flexible Work Options - Employees and employers can benefit from a public policy that meets the diverse needs of the workplace in supporting and encouraging flexible work options such as telecommuting, flexible work arrangements, job sharing and compressed or reduced schedules. Federal statutes that impede these offerings should be updated to provide employers and employees with maximum flexibility to balance work and personal needs.

To access a complete and detailed description of these principles, please click HERE.

Action Needed

Please write your Members of Congress TODAY and urge them to refrain from signing on as a cosponsor to the Healthy Families Act and instead, pledge to work with SHRM in developing a workplace flexibility plan that balances the interest of employers and employees.

If you are a SHRM member, to write your elected officials using HRVoice, follow these steps:

1. Log onto HR Voice by clicking HERE and enter your member number and last name.
    
2. Under the heading "Take Immediate Action on these Hot Issues," click on: "VOTE NO on the Healthy Families Act" and
    
3. Feel free to personalize your letters by including specific information about the organization you work for, your experiences in the workplace, and why this legislation would negatively impact your organization. Just place your cursor on the text of the letter where you would like to edit.

RI House Bill 5143 (E-Verify Compliance) Is Passed on 5/12/09

On May 12, 2009, the Rhode Island House of Representatives Tuesday passed the "E-Verify" bill requiring private employers to electronically verify the citizenship of new hires. The proposal succeeded on a 38-33 vote and now heads to the Senate.

Rep. Charlene Lima, D-Cranston, speaker pro tempore, voted against the bill, arguing that the federal E-Verify program makes too many mistakes to be relied upon. Floor debate also focused on the impact to the state's ailing business community.

More than a half-dozen states now mandate the use of E-Verify according to the National Council of State Legislators, with hundreds of businesses using the program on a voluntary basis. Last year in Rhode Island, Governor Carcieri issued an executive order that, in part, requires state agencies and vendors to use the same database to run similar checks.

Recent legislative alerts from the Rhode Island State Council of SHRM urged HRM-RI members and other HR professionals to oppose RI House Bill 5143. For more background on this issue and a list of "talking points", see the next article below.

SHRM Alert 3/19: U.S. DOL Releases Model COBRA Notices to Help Satisfy ARRA's Notice Provisions

The American Recovery and Reinvestment Act of 2009 (ARRA) aims at creating and/or saving more than 3 million jobs. ARRA mandates that plans notify certain current and former participants and beneficiaries about the COBRA premium reduction subsidy. On March 19, 2009, The U.S. Department of Labor (DOL) released model notices it created to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions.

General Notice (Full version)
http://www.dol.gov/ebsa/COBRAgeneralnoticefullversion.doc

General Notice (Abbreviated version)
http://www.dol.gov/ebsa/COBRAgeneralnoticeabbreviatedversion.doc

Alternative Notice
http://www.dol.gov/ebsa/COBRAalternativenotice.doc

Notice in Connection with Extended Election Periods
http://www.dol.gov/ebsa/COBRAextendedelectionperiodnotice.doc

Read more about the DOL's model notices on the SHRM website at:
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/COBRAnotices.aspx

RI SHRM Alert 3/7/09: Stimulus Package Changes COBRA Procedures

The enactment into law of HR 1, the American Recovery and Reinvestment Act of 2009, (ARRA) implements new temporary procedures for employers relating to the administration of Consolidated Omnibus Budget Reconciliation Act (COBRA) benefits.

HR 1 establishes a 65% government subsidy for eligible workers towards their COBRA coverage for up to 9 months. The Treasury Department will administer the subsidy, providing employers or health plans (if they administer COBRA benefits) with a credit against payroll taxes for the cost of the subsidy. Workers who were involuntarily terminated between September 1, 2008 and December 31, 2009, with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible.  Additionally, the employee, not the employer, will be responsible for abiding by the salary cap that determines eligibility. Should an employee accept COBRA coverage when they are ineligible, they will have to remit the subsidy to the federal government through their tax returns.

Qualified individuals who initially decline COBRA coverage have an additional 60 days after they receive notice of the special election period to receive the subsidy. Should an employee subsequently elect coverage, the effective date of coverage would begin February 17, 2009, the day that HR 1 was signed into law by President Barack Obama.

The Internal Revenue Service (IRS) released guidelines (IR-2009-15) on February 26, 2009, to assist employers with the task of administering these benefits. Employers can click HERE to visit the IRS’s website. The website contains a FAQ< for employers as well as a revised version of Form 941 (Employer’s Quarterly Federal Tax Return), which employers will use to claim credit for the COBRA medical premiums they pay for their former employees beginning with the first quarter of 2009. The IRS will send this form to employers in mid-March.

As part of the administration of this program, employers must maintain supporting documentation for the credit claimed. This includes:

• Information on the receipt, including dates and amounts, of the eligible individual’s 35% share of the premium;
• In the case of an insured plan, copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA;
• In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the eligible individuals;
• Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy;
• Proof of each eligible individual’s eligibility for COBRA coverage at any time during the period from September 1, 2008, to December 31, 2009, and election of COBRA coverage;
• A record of the Social Security numbers of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for 1 individual or 2 or more individuals;
• Other documents necessary to verify the correct amount of reimbursement.

For additional references related to COBRA and the American Recovery and Reinvestment Act, please click on the links below.

COBRA Coverage Expansion: HR Action Steps to Take Now

Claiming the New COBRA Premium Credit on Payroll Tax Forms

HR 1, the American Recovery and Reinvestment Act of 2009, (ARRA)
 
President Obama Signs $789 Billion Stimulus Bill

Stimulus Package Includes Significant HR Provisions

Stimulus Law Definitely a Lifeline

Express Request: SHRM members can receive additional resources on this topic.  Visit SHRM’s Express Request service web site and select the key term Economic Stimulus Plan-COBRA Subsidy Only. 

Register for the SHRM Webcast: COBRA and CHIPRA: New Rules for Employers -- March 11, 2:00 p.m.- 3:15 p.m. ET

RI SHRM Alert 2/24/09:  Economic Stimulus Legislation Update --
COBRA Compliance Resources

Resource Links and Information regarding the COBRA provisions outlined in the Economic Stimulus Plan of 2009 may be found at the following:

Office of OHIC

Please note that the Office of the RI Health Commissioner has posted information regarding the The Federal Economic Stimulus Package subsidy regarding the purchase of COBRA for certain people on the OHIC website at http://www.ohic.ri.gov/Employers_Insurance.php

HR EXPRESS

If you are a SHRM member and would like to access the latest information on the Economic Stimulus Packages and COBRA compliance please access the HR EXPRESS Page< and under Hot Topics request the Economic Stimulus Plan of 2009.

Free Webinar

The Cornerstone Group offers a Free Webinar on Monday March 2 at 1 PM to review the COBRA related provisions in the ACT.

If you would like to take part in the Webinar, hosted by Larry who will explain the qualifications and impact this Stimulus Package will have on COBRA Benefits, please
click here to REGISTER

Cornerstone’s ERISA attorney, Lawrence Grudzien practices exclusively in the field of employee benefits. He has more than 28 years’ experience advising on all aspects of employee benefit law including: drafting and reviewing individually designed and prototype retirement plans, performing due diligence on employee benefit issues for merger, acquisition and outsourcing transactions, and advising on administrative and design issues.

More at SHRM

COBRA Coverage Expansion: HR Action Steps to Take Now 

"The American Recovery and Reinvestment Act of 2009 (ARRA), the financial stimulus law signed by President Barack Obama on Feb. 17, 2009, includes significant changes to the COBRA continuation coverage rules."

    -- 2/17/2009 by Toni Pilzner, Butzel Long

Stimulus Bill Imposes More Stringent HIPAA Requirements 

"The American Recovery and Reinvestment Act, the new stimulus package signed by President Barack Obama on Feb. 17, 2009, imposes significant new Health Insurance Portability and Accountability Act (HIPAA) privacy and security requirements on health plans, business associates and other vendors of personal health records. The bill also includes appropriations for health information technology (HIT) and new HIT requirements for the government sector (or businesses who have government contracts). The HIT and HIPAA requirements fall under the Health Information Technology for Economic and Clinical Health (HITECH) Act."

    -- 2/19/2009 by Christy Tinnes

You can find an excellent summary of the Act at:

The American Benefits Council

Summary of Key COBRA Provisions in the American Recovery and Reinvestment Act

Overview of the American Recovery and Reinvestment Act of 2009 From the RI Senate Fiscal Office

To learn more about the impact the Recovery and Reinvestment Act will have on Rhode Island, read the 34-slide presentation prepared by the Senate Fiscal Office and/or the 72-page report prepared by the State Budget Office, Senate Fiscal Staff, and House Fiscal Staff.

Slide show link: http://www.rilin.state.ri.us/SenateFinance/ARRAFedPresentation.pdf

Report link: http://www.rilin.state.ri.us/SenateFinance/ARRActRev.pdf

RI SHRM Alert: House and Senate Pass Economic Stimulus Legislation

The American Recovery and Reinvestment Act of 2009, (ARRA) has been signed into law. Although the bill is aimed at aiding the faltering economy, it does contain several provisions affecting the workplace. Key HR provisions include:
 
Consolidated Omnibus Budget Reconciliation Act (COBRA) Continuation of Coverage:

• COBRA Subsidy -- Eligible workers will receive a 65 percent subsidy toward their health care coverage premium for up to 9 months. The Treasury Department will administer the subsidy, providing employers or health plans, if they administer COBRA benefits, to receive a credit against payroll taxes for the cost of the subsidy. The subsidy would terminate upon offer of any new employer-sponsored health care coverage or Medicare eligibility.
    
• Employee Eligibility -- Individuals who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible for the COBRA premium assistance, along with their family. Qualified individuals, who initially decline COBRA coverage, would be given an additional 60 days after they receive notice of the special election period to elect to receive the subsidy. The election period begins on the date of enactment of the ARRA.
    
• Special Enrollment -- The bill allows group health plans to provide a special enrollment right to allow eligible individuals to elect different coverage under the plan in electing COBRA continuation coverage.
    
• Notice Requirements -- COBRA notices must include information on the availability of the premium assistance. Model notices from the Department of Labor are due 30 days after enactment.
    
• Effective Date -- These provisions are effective for premiums the first calendar month following the date of enactment.

Health Information Technology: The ARRA also includes $19 billion to accelerate the adoption and use of health information technology (IT) by doctors and hospitals. The bill establishes a process led by the federal government to develop standards by 2010 that allow for the secure nationwide electronic exchange of health information. The bill also expands current federal privacy and security protections for health information.

Making Work Pay Credit: The ARRA creates a refundable tax credit of up to $400 per person, $800 per couple during 2009 and 2010, This tax credit is calculated at a rate of 6.2% of earned income, and would phase out for taxpayers with adjusted gross income in excess of $150,000 for couples filing jointly and $75,000 for single filers. Taxpayers will receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks, or through claiming the credit on their tax returns.

Unemployment Compensation:

• Extension of Benefits: This provision would extend the time period in which workers are able to collect their unemployment benefits. The recently enacted Unemployment Compensation Act of 2008 (Public Law 110 -- 449) created a temporary emergency unemployment compensation program. As opposed to the original program termination date of March 31, 2009, the ARRA would terminate the Emergency Unemployment Compensation program on December 31, 2009. Under this proposal no compensation under the program would be payable after May 31, 2010. The benefits and administration costs would be funded through the general fund of the Treasury rather than the Federal Unemployment Tax Act (FUTA) surtax.
   
• Expansion of Benefits: An increase of $25 per weekly benefit would be available to all individuals receiving regular unemployment benefits, extended benefits or emergency unemployment benefits. The $25 additional weekly benefits would be available in states that enter into an agreement with the Labor Secretary.
   
• Modernizations: This provision would provide $7 Billion in funding to states to improve the administration of their unemployment compensation systems. The incentive and administrative payments are paid from the UI trust fund and through an extension of the existing FUTA surtax, paid by employers. To receive one-third of its allotted funds, a state must adopt an "alternative base period" allowing workers to meet eligibility requirements by counting their most recent wages. Additionally, states would have to meet two out of the six requirements below to access funds:
     
  • Family Related Needs: Would provide UI compensation for workers who have voluntarily left their jobs due to illness or disability of an immediate family member, the relocation of a spouse for employment or domestic violence. Currently, a worker is only eligible for UI compensation if they have lost their jobs through no fault of their own and must be able, available, and actively seeking work. This provision creates a new entitlement to unemployment compensation for individuals who limit their work search and availability for work and separate themselves from employment for the illness or disability of a member of their immediate family (as defined by the Secretary of Labor)
       
  • Job training: Provide training benefits to unemployed workers laid off from a "declining" occupation who are enrolled in a state-approved training program for entry into a high-demand occupation
      
  • Part-time work: Provide unemployment compensation benefits to individuals seeking part-time work
      
  • Uniform 26 weeks: Raise maximum compensation caps so that all long-term unemployed workers can receive a full 26 weeks of benefits
      
  • Child Assistance: Pay unemployed workers at least an extra $15 per week for each of the worker's dependents

Work Opportunity Tax Credit (WOTC): The work opportunity tax credit is currently available on an elective basis for employers hiring individuals from one or more of nine targeted groups. The amount of the credit available to an employer is determined by the amount of qualified wages paid by the employer. The ARRA expands the WOTC by creating two new categories of individuals eligible for the credit: unemployed veterans and disconnected youth who begin work for the employer in 2009 or 2010. The proposal is effective for individuals who begin work for an employer after December 31, 2008.

Trade Adjustment Assistance (TAA): Extends TAA benefits for two years for employees who lose their jobs through increased imports or offshoring to certain foreign countries.

Executive Compensation: Would limit compensation for the highest paid individuals at companies who receive assistance from the Troubled Asset Relief Program (TARP). The bill includes a sliding scale of restrictions placed upon the highest earners dependent upon the amount of relief a company receives. The limits would only apply to employees that are required to register with the Securities and Exchange Commission and ould restrict the size of a bonus, which can be no more than a third of the total annual compensation an executive receives. Additionally, the ABBA ould ban "golden parachutes" to departing executives, and bonuses must be paid back to the Treasury under certain circumstances. Limits are also placed on "excessive expenditures" including entertainment, the use of corporate jets and office renovations. Lastly, it would require that TARP recipients hold an annual shareholder vote on approval of executive compensation.

H-1B visas: Prohibits organizations that receive funds under the TARP or certain federal loans from obtaining H-1B visas for two years unless they have taken good faith steps to recruit U.S. workers for the job in which the H-1B is sought. TARP beneficiaries would be required to offer the job to any equally or better qualified U.S. workers who have applied.