HR Management & Compliance

Obama Signs Stimulus Package–New Requirements for HR

Both chambers of Congress have approved an economic stimulus package that includes a COBRA subsidy for laid-off workers and other HR-related provisions. President Barack Obama signed the legislation into law today.

The two chambers of Congress initially approved different versions of the economic stimulus package. Therefore, negotiators from both chambers had to iron out a final version of the legislation for a vote. The House-Senate negotiations resulted in an agreement on the final version of the legislation called a conference report.

The final version of the legislation includes a COBRA subsidy for laid-off workers. The subsidy will be 65 percent of the COBRA premium for a period of 9 months–employers (or health plans if they administer COBRA benefits) will receive a credit against payroll taxes to offset the subsidy. The premium subsidy will cover workers who were affected by involuntary terminations occurring between September 1, 2008, and January 1, 2010.


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There is an income threshold as an additional condition on an individual’s entitlement to the premium subsidy during any taxable year. Taxpayers with gross income that exceeds $145,000 will have to repay the entire amount of the premium subsidy. For taxpayers with gross income between $125,000 and $145,000, the amount of the premium subsidy that must be repaid is reduced proportionately.

The legislation requires that information on the COBRA subsidy be included in COBRA notices. Under the legislation, the Department of Labor will create a model notice within 30 days of enactment.

The House-Senate negotiators decided to drop a provision from the initial House version of the package that would have given COBRA-eligible workers who are 55 and older, or have worked for an employer for 10 or more years, the ability to retain COBRA coverage, at their own expense, until they become Medicare eligible at age 65 or secure coverage through a subsequent employer. Therefore, this provision isn’t in the final version of the legislation.

However, the final legislation does include other HR-related provisions. For example, the legislation increases weekly unemployment benefits by $25. The legislation also provides an extension of the temporary emergency unemployment compensation program (which provides up to 33 weeks of extended benefits) through December 2009. Under the program, no benefits will be payable for any week beginning after May 31, 2010.

The legislation also provides unemployment compensation to workers who leave an employer for “compelling family reasons,” such as domestic violence, illness or disability of an immediate family member, and the need to accompany a spouse to a place from where it is impractical to commute and due to a change in location of the spouse’s employment. The Department of Labor will define immediate family member.