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Questions about ARRA Laws and Regulations

The American Recovery and Reinvestment Act of 2009 (ARRA), enacted by the United States Congress February 2009 and signed into law by President Barack Obama, is an economic stimulus package. Often referred to as The Recovery Act or the Stimulus, the Act came in response to the recession during the late 2000s and aims to protect existing jobs and to create new ones. Temporary relief program were created for those affected by the recession, while objectives to boost the economy included investments in health, education, infrastructure, and ”green energy”. There were doubts among some citizens about this Act in relation to existing employment-related Acts. Below are some of top question on ARRA answered by legal experts.

As I was constructively discharged, I applied for the ARRA premium assistance as well as COBRA. However, my employer has retroactively revoked my eligibility for ARRA, which has affected my COBRA insurance. Is this legal?

Section 3001(a)(3)(C) of the ARRA states that a person who is “involuntarily and indefinitely separated from employment” may receive 65% subsidy of healthcare contributions. However, the courts would refer to the state law to determine facts related to employment separation as “involuntary” termination is not defined under the federal law.

If payments are not made within the stipulated time, Consolidated Omnibus Budget Reconciliation Act (COBRA) permits continuation coverage to be cancelled. You may present a case for “doctrine of mistake” under the contract law, which states that the employer bears risk for mistakes in determining eligibility unless the employee is reasonably aware of the employer’s mistake. In your case, since the employer is in full control of the determination of eligibility, the contract is deemed enforceable if a premium payment is made by the employee and accepted by the employer.

I quit my job and relocated with my husband who was transferred for his job. In Nevada, do I have a claim?

The Unemployment Modernization Act — a component of the ARRA — has model provisions that can be used by states to rewrite laws related to “trailing spouse”, which many states have adopted. However, since it is not mandatory and Nevada has not implemented such a law, your resignation from your job will be seen as voluntary termination and you may not be eligible for any benefits.

Is ”gross misconduct” a disqualifier for benefits under COBRA and ARRA?

Under both ARRA and COBRA, gross misconduct is considered a disqualifier even when such acts are conducted away from workplace. The widely accepted definition for such acts includes gross misconduct in deliberate indifference to the employer’s interests where such conduct is intentional, deliberate, reckless, and wanton.

As termination automatically qualifies an employee for COBRA benefits, the employer must provide recorded proof of the alleged misconduct if there is an intention to bar COBRA continuation rights of the employee. It is incumbent upon the employer to establish gross misconduct as the primary reason for termination. In such a case, the employee must be notified and also given the opportunity to challenge the decision.

Can a terminated employee receiving both COBRA and ARRA benefits do contract work without negatively impacting his eligibility for these subsidies?

The ARRA subsidy sets income limits in cases in which the taxpayer’s adjusted gross income exceeds $145,000, or $290,000 for joint filers, in a tax year during which premium assistance is received. It stipulates that the amount of the premium reduction during that tax year be repaid. Such amount is proportionately reduced for taxpayers with adjusted gross income between $125,000 and $145,000, or $250,000 and $290,000 for joint filers. While premium reduction may be permanently waived, it cannot be obtained later if the adjusted gross income falls below the limits.

What are the restrictions for selling foreign goods to projects receiving ARRA funds?

Under ARRA, certain circumstances prohibit selling foreign products to projects receiving ARRA funds. Section 1605 stipulates that any project receiving ARRA funds for construction, maintenance or repair of public buildings or public work will only use materials and goods are produced in the US. It refers to manufactured goods used directly in construction and does include laboratory or scientific equipment, desks, chairs, etc. Public work is defined as works carried out under the authority, or with funds of, a federal agency. Such work includes streets, subways, airports, railways, dams, bridges, etc., and does not includes works that are not carried out to specifically service the interest of general public.

ARRA was enacted in 2009 in part to help create jobs but also to assist people whose lives have been negatively impacted by the recession. If you have questions regarding fund allocation, provisions under the Act, or individual rights under the ARRA, you may want to ask for clarification from a legal expert.
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