This compliance alert is brought to you courtesy of The Partners Group and member company, Kerr-Cruickshank, Inc. We are a multi-specialty insurance and consulting firm that offers creative employee benefits solutions to our customers. As a valued client or associate, we feel this compliance update provides valuable information to you.

We here at The Partners Group want to ensure that we continue to keep apprised of market changes to better serve you. We have continued to monitor a very important issue in the Federal arena regarding the Economic Stimulus Package and provisions specific to COBRA.

We appreciate the complexity of this new legislation and want to assist you with accurate information to questions that arise. A high level review is provided through this SHRM update and outlines that the COBRA temporary premium assistance provision survived the House-Senate economic stimulus package compromise, while the permanent extension provision of COBRA for older or long-term employees was dropped. COBRA provision in The American Recovery and Reinvestment Act of 2009, which Obama is expected to sign on Tuesday will begin to progress and as details are announced we will continue to provide assistance.

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House and Senate Pass Economic Stimulus Legislation

By a vote of 246 - 183, the House passed this afternoon, HR 1, the American Recovery and Reinvestment Act of 2009, (ARRA). The Senate is expected to pass the bill tonight and President Obama is expected to sign the bill during the week of February 16th.

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 would 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 would 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.