I
107TH CONGRESS
1ST SESSION
H. R. 3501
To amend the Internal Revenue Code of 1986 to provide for economic
recovery.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 13, 2001
Mr. SMITH of Washington (for himself, Mr. DOOLEY of California, Mr.
MORAN of Virginia, Ms. HARMAN, Mr. MALONEY of Connecticut, and Mr.
INSLEE) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Energy
and Commerce, and Education and the Workforce, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of
such provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to provide
for economic recovery.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Recovery Act of 2001’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF
1986.—Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code
of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired after sep-
tember 10, 2001, and before september 11, 2004.
Sec. 102. Temporary increase in expensing under section 179.
TITLE II—SUPPLEMENTAL REBATE FOR INDIVIDUALS.
Sec. 201. Supplemental rebate.
TITLE III—TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS
Sec. 301. Short title.
Sec. 302. Federal-State agreements.
Sec. 303. Temporary supplemental unemployment compensation account.
Sec. 304. Payments to States having agreements under this title.
Sec. 305. Financing provisions.
Sec. 306. Fraud and overpayments.
Sec. 307. Definitions.
Sec. 308. Applicability.
Sec. 309. Rule of construction regarding changes to State law.
TITLE IV—HEALTH INSURANCE COVERAGE OPTIONS FOR
RECENTLY UNEMPLOYED INDIVIDUALS AND THEIR FAMILIES
Sec. 401. Premium assistance for COBRA continuation coverage for individuals
and their families.
Sec. 402. State option to provide temporary medicaid coverage for certain unin-
sured individuals.
Sec. 403. State option to provide temporary coverage under medicaid for the
unsubsidized portion of COBRA continuation premiums.
Sec. 404. Temporary increases of medicaid FMAP for fiscal year 2002.
Sec. 405. Definitions.
TITLE V—REVENUE OFFSET
Sec. 501. Slowing reductions in highest marginal income tax rate.
TITLE VI—EMERGENCY EMPLOYMENT AND TRAINING
ASSISTANCE FOR DISLOCATED WORKERS
Sec. 601. Additional funding for national emergency grants under the Work-
force Investment Act of 1998.
TITLE I—BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CER-
TAIN 
PROPERTY 
ACQUIRED 
AFTER 
SEP-
TEMBER 10, 2001, AND BEFORE SEPTEMBER
11, 2004.
(a) IN GENERAL.—Section 168 (relating to acceler-
ated cost recovery system) is amended by adding at the
end the following new subsection:
‘‘(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE
SEPTEMBER 11, 2004.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified property—
‘‘(A) the depreciation deduction provided
by section 167(a) for the taxable year in which
such property is placed in service shall include
an allowance equal to 30 percent of the ad-
justed basis of the qualified property, and
‘‘(B) the adjusted basis of the qualified
property shall be reduced by the amount of
such deduction before computing the amount
otherwise allowable as a depreciation deduction
under this chapter for such taxable year and
any subsequent taxable year.
‘‘(2) QUALIFIED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
property’ means property—
‘‘(i)(I) to which this section applies
which has a recovery period of 20 years or
less or which is water utility property, or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which
a deduction is allowable under section
167(a) without regard to this subsection,
or
‘‘(ii) the original use of which com-
mences with the taxpayer after September
10, 2001,
‘‘(iii) which is—
‘‘(I) acquired by the taxpayer
after September 10, 2001, and before
September 11, 2004, but only if no
written binding contract for the acqui-
sition was in effect before September
11, 2001, or
‘‘(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after Sep-
tember 10, 2001, and before Sep-
tember 11, 2004, and
‘‘(iv) which is placed in service by the
taxpayer before January 1, 2005.
Such term includes qualified leasehold improve-
ment property if such property meets the re-
quirements of clauses (ii), (iii), and (iv), deter-
mined by substituting ‘2002’ for ‘2004’ each
place it appears and by substituting ‘2003’ for
‘2005’.
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified property’
shall not include any property to which the
alternative depreciation system under sub-
section (g) applies, determined—
‘‘(I) without regard to paragraph
(7) of subsection (g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) ELECTION OUT.—If a taxpayer
makes an election under this clause with
respect to any class of property for any
taxable year, this subsection shall not
apply to all property in such class placed
in service during such taxable year.
‘‘(iii) REPAIRED OR RECONSTRUCTED
PROPERTY.—Except as otherwise provided
in regulations, the term ‘qualified property’
shall not include any repaired or recon-
structed property.
‘‘(iv) 
QUALIFIED
LEASEHOLD
IM-
PROVEMENT PROPERTY.—The term ‘quali-
fied property’ shall not include any quali-
fied leasehold improvement property (as
defined in section 168(e)(6)).
‘‘(C) SPECIAL RULES RELATING TO ORIGI-
NAL USE.—
‘‘(i) 
SELF-CONSTRUCTED
PROP-
ERTY.—In the case of a taxpayer manufac-
turing, constructing, or producing property
for the taxpayer’s own use, the require-
ments of clause (iii) of subparagraph (A)
shall be treated as met if the taxpayer be-
gins manufacturing, constructing, or pro-
ducing the property after September 10,
2001, and before September 11, 2004.
‘‘(ii) SALE-LEASEBACKS.—For pur-
poses 
of 
subparagraph 
(A)(ii), 
if
property—
‘‘(I) is originally placed in service
after September 10, 2001, by a per-
son, and
‘‘(II) sold and leased back by
such person within 3 months after the
date such property was originally
placed in service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D) 
COORDINATION
WITH
SECTION
280F.—For purposes of section 280F—
‘‘(i) AUTOMOBILES.—In the case of a
passenger automobile (as defined in section
280F(d)(5)) which is qualified property,
the Secretary shall increase the limitation
under section 280F(a)(1)(A)(i) by $4,600.
‘‘(ii) LISTED PROPERTY.—The deduc-
tion allowable under paragraph (1) shall be
taken into account in computing any re-
capture amount under section 280F(b)(2).
‘‘(E) CERTAIN AIRCRAFT CONTRACTS DIS-
REGARDED
FOR
PURPOSE
OF
BINDING
CON-
TRACT LIMITATION.—
‘‘(i) IN
GENERAL.—For purposes of
paragraph (2)(A)(iii)(I), a qualified air-
craft contract shall be disregarded for pur-
poses of determining whether a written
binding contract for the acquisition of air-
craft was in effect before September 11,
2001.
‘‘(ii) QUALIFIED
AIRCRAFT
CONTRACT.—The
term ‘qualified aircraft contract’ means a contract in
effect before September 11, 2001, for the acquisition
of one or more aircraft if, as to the aircraft in ques-
tion, less than 50 percent of the stated purchase
price for the aircraft had been paid to the seller of
the aircraft as of September 11, 2001.
‘‘(iii) AIRCRAFT.—The term ‘aircraft’ means
aircraft used by a corporation engaged in the busi-
ness of transporting persons or property by air.
‘‘(3) QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
leasehold improvement property’ means any im-
provement to an interior portion of a building
which is nonresidential real property if—
‘‘(i) such improvement is made under
or pursuant to a lease (as defined in sub-
section (h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such por-
tion,
‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion, and
‘‘(iii) such improvement is placed in
service more than 3 years after the date
the building was first placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural frame-
work of the building.
son who was the lessor of such improvement
when such improvement was placed in service,
such improvement shall be qualified leasehold
improvement property (if at all) only so long as
such improvement is held by such person.’’.
(b) ALLOWANCE AGAINST ALTERNATIVE MINIMUM
TAX.—
(1) IN GENERAL.—Section 56(a)(1)(A) (relat-
ing to depreciation adjustment for alternative min-
imum tax) is amended by adding at the end the fol-
lowing new clause:
‘‘(iii) ADDITIONAL
ALLOWANCE
FOR
CERTAIN PROPERTY ACQUIRED AFTER SEP-
TEMBER
10, 
2001, 
AND
BEFORE
SEP-
TEMBER
11, 2004.—The deduction under
section 168(k) shall be allowed.’’
(2) CONFORMING AMENDMENT.—Clause (i) of
section 56(a)(1)(A) is amended by striking ‘‘clause
(ii)’’ both places it appears and inserting ‘‘clauses
(ii) and (iii)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
September 10, 2001, in taxable years ending after such
date.
SEC. 102. TEMPORARY INCREASE IN EXPENSING UNDER
SECTION 179.
(a) IN GENERAL.—The table contained in section
179(b)(1) (relating to dollar limitation) is amended to
read as follows:
‘‘If the taxable year
The applicable
begins in:
amount is:
2001 .......................................................................
$24,000
2002 or 2003 .........................................................
$35,000
2004 or thereafter .................................................
$25,000.’’.
(b) TEMPORARY INCREASE IN AMOUNT OF PROP-
ERTY TRIGGERING PHASEOUT OF MAXIMUM BENEFIT.—
Paragraph (2) of section 179(b) is amended by inserting
before the period ‘‘($325,000 in the case of taxable years
beginning during 2002 or 2003)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
TITLE II—SUPPLEMENTAL
REBATE FOR INDIVIDUALS.
SEC. 201. SUPPLEMENTAL REBATE.
(a) IN GENERAL.—Section 6428 (relating to accel-
eration of 10 percent income tax rate bracket benefit for
2001) is amended by adding at the end the following new
subsection:
‘‘(f) SUPPLEMENTAL REBATE.—
‘‘(1) IN GENERAL.—Each individual who was
an eligible individual for such individual’s first tax-
able year beginning in 2000 and who, before October
16, 2001—
‘‘(A) filed a return of tax imposed by sub-
title A for such taxable year, or
‘‘(B) filed a return of income tax with the
government of American Samoa, Guam, the
Commonwealth of the Northern Mariana Is-
lands, the Commonwealth of Puerto Rico, or
the Virgin Islands of the United States,
shall be treated as having made a payment against
the tax imposed by chapter 1 for such first taxable
year in an amount equal to the supplemental refund
amount for such taxable year.
‘‘(2) SUPPLEMENTAL
REFUND
AMOUNT.—For
purposes of this subsection, the supplemental refund
amount is an amount equal to the excess (if any)
of—
‘‘(A)(i) $600 in the case of taxpayers to
whom section 1(a) applies,
‘‘(ii) $500 in the case of taxpayers to
whom section 1(b) applies, and
‘‘(iii) $300 in the case of taxpayers to
whom subsections (c) or (d) of section 1 ap-
plies, over
‘‘(B) the amount of any advance refund
amount paid to the taxpayer under subsection
(e).
‘‘(3) TIMING
OF
PAYMENTS.—In the case of
any overpayment attributable to this subsection, the
Secretary shall, subject to the provisions of this title,
refund or credit such overpayment as rapidly as pos-
sible.
‘‘(4) NO INTEREST.—No interest shall be al-
lowed on any overpayment attributable to this sub-
section.
‘‘(5) SPECIAL
RULE
FOR
CERTAIN
NON-
RESIDENTS.—The determination under subsection
(c)(2) as to whether an individual who filed a return
of tax described in paragraph (1)(B) is a non-
resident alien individual shall, under rules prescribed
by the Secretary, be made by reference to the pos-
session or Commonwealth with which the return was
filed and not the United States.’’.
(b) TECHNICAL CORRECTION.—
(1) IN
GENERAL.—Subsection (b) of section
6428 is amended to read as follows:
‘‘(b) CREDIT TREATED AS NONREFUNDABLE PER-
SONAL CREDIT.—For purposes of this title, the credit al-
lowed under this section shall be treated as a credit allow-
able under subpart A of part IV of subchapter A of chap-
ter 1.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (d) of section 6428 is
amended to read as follows:
‘‘(d) COORDINATION WITH ADVANCE REFUNDS OF
CREDIT.—
‘‘(1) IN
GENERAL.—The amount of credit
which would (but for this paragraph) be allowable
under this section shall be reduced (but not below
zero) by the aggregate refunds and credits made or
allowed to the taxpayer under subsection (e). Any
failure to so reduce the credit shall be treated as
arising out of a mathematical or clerical error and
assessed according to section 6213(b)(1).
‘‘(2) JOINT RETURNS.—In the case of a refund
or credit made or allowed under subsection (e) with
respect to a joint return, half of such refund or cred-
it shall be treated as having been made or allowed
to each individual filing such return.’’.
(B) Paragraph (2) of section 6428(e) is
amended to read as follows:
‘‘(2) ADVANCE
REFUND
AMOUNT.—For pur-
poses of paragraph (1), the advance refund amount
is the amount that would have been allowed as a
credit under this section for such first taxable year
if—
‘‘(A) this section (other than subsections
(b) and (d) and this subsection) had applied to
such taxable year, and
‘‘(B) the credit for such taxable year were
not allowed to exceed the excess (if any) of—
‘‘(i) the sum of the regular tax liabil-
ity (as defined in section 26(b)) plus the
tax imposed by section 55, over
‘‘(ii) the sum of the credits allowable
under part IV of subchapter A of chapter
1 (other than the credits allowable under
subpart C thereof, relating to refundable
credits).’’.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 6428(d), as
amended by subsection (b), is amended by striking
‘‘subsection (e)’’ and inserting ‘‘subsections (e) and
(f)’’.
(2) Paragraph (2) of section 6428(d), as
amended by subsection (b), is amended by striking
‘‘subsection (e)’’ and inserting ‘‘subsection (e) or
(f)’’.
(3) Paragraph (3) of section 6428(e) is amend-
ed by striking ‘‘December 31, 2001’’ and inserting
‘‘the date of the enactment of the Economic Recov-
ery Act of 2001’’.
(d) REPORTING REQUIREMENT.—For purposes of
determining the individuals who are eligible for the supple-
mental rebate under section 6428(f) of the Internal Rev-
enue Code of 1986, the governments of American Samoa,
Guam, the Commonwealth of the Northern Mariana Is-
lands, the Commonwealth of Puerto Rico, and the Virgin
Islands of the United States shall provide, at such time
and in such manner as provided by the Secretary of the
Treasury, the names, addresses, and taxpayer identifying
numbers (within the meaning of section 6109 of the Inter-
nal Revenue Code of 1986) of residents who filed returns
of income tax with such governments for 2000.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall take effect on the date of the enactment of this
Act.
(2) TECHNICALS.—The amendments made by
subsection (b) shall take effect as if included in the
amendment made by section 101(b)(1) of the Eco-
nomic Growth and Tax Relief Reconciliation Act of
2001.
TITLE 
III—TEMPORARY 
EN-
HANCED 
UNEMPLOYMENT
BENEFITS
SEC. 301. SHORT TITLE.
This title may be cited as the ‘‘Temporary Unemploy-
ment Compensation Act of 2001’’.
SEC. 302. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.—Any State which desires to do so
may enter into and participate in an agreement under this
title with the Secretary of Labor (in this title referred to
as the ‘‘Secretary’’). Any State which is a party to an
agreement under this title may, upon providing 30 days’
written notice to the Secretary, terminate such agreement.
(b) PROVISIONS OF AGREEMENT.—
(1) IN GENERAL.—Any agreement under sub-
section (a) shall provide that the State agency of the
State will make—
(A) payments of temporary enhanced reg-
ular unemployment compensation to individuals;
and
(B) payments of temporary supplemental
unemployment 
compensation 
to 
individuals
who—
(i) have—
(I) exhausted all rights to regular
compensation under the State law (or,
as the case may be, all rights to tem-
porary enhanced regular unemploy-
ment compensation); or
(II) received 26 weeks of regular
compensation under the State law (or,
as the case may be, 26 weeks of tem-
porary enhanced regular unemploy-
ment compensation);
(ii) do not have any rights to regular
compensation under the State law of any
other State (or to temporary enhanced reg-
ular unemployment compensation); and
(iii) are not receiving compensation
under the unemployment compensation law
of any other country.
(2) TEMPORARY
ENHANCED
REGULAR
UNEM-
PLOYMENT COMPENSATION DEFINED.—For purposes
of this title, the term ‘‘temporary enhanced regular
unemployment compensation’’ means compensation
in amounts and to the extent that regular compensa-
tion would be determined if the State law was ap-
plied with the following 3 conditions:
(A) ALTERNATIVE BASE PERIOD.—An in-
dividual shall be eligible for regular compensa-
tion if the individual would be so eligible, deter-
mined by applying—
(i) the base period that would other-
wise apply under the State law if this title
had not been enacted; or
(ii) a base period ending at the close
of the calendar quarter most recently com-
pleted before the date of the individual’s
application for benefits, provided that wage
data for that quarter has been reported to
the State or supplied to the State agency
on behalf of the individual;
whichever results in the greater amount.
(B) PART-TIME
EMPLOYMENT.—An indi-
vidual shall not be denied regular compensation
under the State law’s provisions relating to
availability for work, active search for work, or
refusal to accept work, solely by virtue of the
fact that such individual is seeking, or is avail-
able for, only part-time (and not full-time)
work, if—
(i) the individual’s employment on
which eligibility for the regular compensa-
tion is based was part-time employment; or
(ii) the individual can show good
cause for seeking, or being available for,
only part-time (and not full-time) work.
(C) INCREASED BENEFITS.—
(i) IN GENERAL.—The amount of reg-
ular compensation (including dependents’
allowances) payable for any week shall be
equal to the amount determined under the
State law (before the application of this
subparagraph), plus an amount equal to
the greater of—
(I) 15 percent of the amount so
determined; or
(II) $25.
(ii) ROUNDING.—For purposes of de-
termining the amount under clause (i)(I),
such amount shall be rounded to the dollar
amount specified under State law.
(c) NONREDUCTION RULE.—Under the agreement,
subsection (b)(2)(C) shall not apply (or shall cease to
apply) with respect to a State upon a determination by
the Secretary that the method governing the computation
of regular compensation under the State law of that State
has been modified in a way such that the average weekly
amount of regular compensation which will be payable
during the period of the agreement (determined dis-
regarding any temporary enhanced regular unemployment
compensation) will be less than the average weekly amount
of regular compensation which would otherwise have been
payable during such period under the State law, as in ef-
fect on September 11, 2001.
(d) COORDINATION RULES.—
(1) REGULAR COMPENSATION PAYABLE UNDER
A FEDERAL LAW.—The conditions described in sub-
paragraphs (A), (B), and (C) of subsection (b)(2)
shall also apply in determining the amount of bene-
fits payable under any Federal law to the extent
that those benefits are determined by reference to
regular compensation payable under the State law of
the State involved.
(2) TEMPORARY
SUPPLEMENTAL
UNEMPLOY-
MENT COMPENSATION TO SERVE AS SECOND-TIER
BENEFITS.—Notwithstanding any other provision of
law, neither regular compensation, temporary en-
hanced regular unemployment compensation, ex-
tended compensation, nor additional unemployment
compensation under any Federal or State law shall
be payable to any individual for any week for which
temporary supplemental unemployment compensa-
tion is payable to such individual.
(3) TREATMENT
OF
OTHER
UNEMPLOYMENT
COMPENSATION.—After the date on which a State
enters into an agreement under this title, any reg-
ular compensation (or, as the case may be, tem-
porary enhanced regular unemployment compensa-
tion) in excess of 26 weeks, any extended compensa-
tion, and any additional compensation under any
Federal or State law shall be payable to an indi-
vidual in accordance with the State law after such
individual has exhausted any rights to temporary
supplemental unemployment compensation under the
agreement.
(e) EXHAUSTION OF BENEFITS.—For purposes of
subsection (b)(1)(B)(i)(I), an individual shall be consid-
ered to have exhausted such individual’s rights to regular
compensation (or, as the case may be, rights to temporary
enhanced regular unemployment compensation) under a
State law when—
(1) no payments of regular compensation can
be made under such law because the individual has
received all such compensation available to the indi-
vidual based on employment or wages during the in-
dividual’s base period; or
(2) the individual’s rights to such compensation
have been terminated by reason of the expiration of
the benefit year with respect to which such rights
existed.
(f) WEEKLY BENEFIT AMOUNT, TERMS AND CONDI-
TIONS, ETC. RELATING TO TEMPORARY SUPPLEMENTAL
UNEMPLOYMENT COMPENSATION.—For purposes of any
agreement under this title—
(1) the amount of temporary supplemental un-
employment compensation which shall be payable to
an individual for any week of total unemployment
shall be equal to—
(A) the amount of regular compensation
(including dependents’ allowances) payable to
such individual under the State law for a week
for total unemployment during such individual’s
benefit year; plus
(B) the amount of any temporary en-
hanced regular unemployment compensation
payable to such individual for a week for total
unemployment during such individual’s benefit
year;
(2) the terms and conditions of the State law
which apply to claims for regular compensation and
to the payment thereof shall apply to claims for tem-
porary supplemental unemployment compensation
and the payment thereof, except where inconsistent
with the provisions of this title or with the regula-
tions or operating instructions of the Secretary pro-
mulgated to carry out this title; and
(3) the maximum amount of temporary supple-
mental unemployment compensation payable to any
individual for whom a temporary supplemental un-
employment compensation account is established
under section 303 shall not exceed the amount es-
tablished in such account for such individual.
SEC. 303. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT
COMPENSATION ACCOUNT.
(a) IN GENERAL.—Any agreement under this title
shall provide that the State will establish, for each eligible
individual who files an application for temporary supple-
mental unemployment compensation, a temporary supple-
mental unemployment compensation account.
(b) AMOUNT IN ACCOUNT.—
(1) IN GENERAL.—The amount established in
an account under subsection (a) shall be equal to the
greater of—
(A) 50 percent of—
(i) the total amount of regular com-
pensation (including dependents’ allow-
ances) payable to the individual during the
individual’s benefit year under such law;
plus
(ii) the amount of any temporary en-
hanced regular unemployment compensa-
tion payable to the individual during the
individual’s benefit year; or
(B) 13 times the individual’s weekly ben-
efit amount.
(2) WEEKLY BENEFIT AMOUNT.—For purposes
of paragraph (1)(B), an individual’s weekly benefit
amount for any week is an amount equal to—
(A) the amount of regular compensation
(including dependents’ allowances) under the
State law payable to the individual for such
week for total unemployment; plus
(B) the amount of any temporary en-
hanced regular unemployment compensation
payable to the individual for such week for total
unemployment.
SEC. 304. PAYMENTS TO STATES HAVING AGREEMENTS
UNDER THIS TITLE.
(a) GENERAL RULE.—There shall be paid to each
State which has entered into an agreement under this title
an amount equal to—
(1) 100 percent of any temporary enhanced reg-
ular unemployment compensation made payable to
individuals by such State by virtue of the conditions
which are described in section 302(b)(2) and deemed
to be in effect with respect to such State pursuant
to such section;
(2) 100 percent of any regular compensation—
(A) which is paid to individuals by such
State by reason of the fact that its State law
contains provisions comparable to the condi-
tions described in subparagraphs (A) and (B)
of section 302(b)(2); but only
(B) to the extent that those amounts
would, if such amounts were instead payable by
virtue of the State law’s being deemed to be in
compliance with such conditions pursuant to
such section, have been reimbursable under
paragraph (1); and
(3) 100 percent of the temporary supplemental
unemployment compensation paid to individuals by
the State pursuant to such agreement.
(b) DETERMINATION OF AMOUNT.—Sums under sub-
section (a) payable to any State by reason of such State
having an agreement under this title shall be payable, ei-
ther in advance or by way of reimbursement (as may be
determined by the Secretary), in such amounts as the Sec-
retary estimates the State will be entitled to receive under
this title for each calendar month, reduced or increased,
as the case may be, by any amount by which the Secretary
finds that the Secretary’s estimates for any prior calendar
month were greater or less than the amounts which should
have been paid to the State. Such estimates may be made
on the basis of such statistical, sampling, or other method
as may be agreed upon by the Secretary and the State
agency of the State involved.
(c) ADMINISTRATIVE EXPENSES, ETC.—There is
hereby appropriated, without fiscal year limitation, out of
the employment security administration account of the
Unemployment Trust Fund (as established by section
901(a) of the Social Security Act (42 U.S.C. 1101(a)))
$500,000,000 to reimburse States for the costs of the ad-
ministration of agreements under this title (including any
improvements in technology in connection therewith) and
to provide reemployment services to unemployment com-
pensation claimants in States having agreements under
this title. Each State’s share of the amount appropriated
by the preceding sentence shall be determined by the Sec-
retary according to the factors described in section 302(a)
of the Social Security Act (42 U.S.C. 501(a)) and certified
by the Secretary to the Secretary of the Treasury.
SEC. 305. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemploy-
ment compensation account (as established by section
905(a) of the Social Security Act (42 U.S.C. 1105(a))),
and the Federal unemployment account (as established by
section 904(g) of such Act (42 U.S.C. 1104(g))), of the
Unemployment Trust Fund (as established by section
904(a) of such Act (42 U.S.C. 1104(a))) shall be used,
in accordance with subsection (b), for the making of pay-
ments (described in section 304(a)) to States having
agreements entered into under this title.
(b) CERTIFICATION.—The Secretary shall from time
to time certify to the Secretary of the Treasury for pay-
ment to each State the sums described in section 304(a)
which are payable to such State under this title. The Sec-
retary of the Treasury, prior to audit or settlement by the
General Accounting Office, shall make payments to the
State in accordance with such certification by transfers
from the extended unemployment compensation account,
as so established (or, to the extent that there are insuffi-
cient funds in that account, from the Federal unemploy-
ment account, as so established) to the account of such
State in the Unemployment Trust Fund (as so estab-
lished).
SEC. 306. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has
made, or caused to be made by another, a false statement
or representation of a material fact, or knowingly has
failed, or caused another to fail, to disclose a material fact,
and as a result of such false statement or representation
or of such nondisclosure such individual has received any
temporary enhanced regular unemployment compensation
or temporary supplemental unemployment compensation
under this title to which such individual was not entitled,
such individual—
(1) shall be ineligible for any further benefits
under this title in accordance with the provisions of
the applicable State unemployment compensation
law relating to fraud in connection with a claim for
unemployment compensation; and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who
have received any temporary enhanced regular unemploy-
ment compensation or temporary supplemental unemploy-
ment compensation under this title to which such individ-
uals were not entitled, the State shall require such individ-
uals to repay those benefits to the State agency, except
that the State agency may waive such repayment if it de-
termines that—
(1) the payment of such benefits was without
fault on the part of any such individual; and
(2) such repayment would be contrary to equity
and good conscience.
(c) RECOVERY BY STATE AGENCY.—
(1) IN GENERAL.—The State agency may re-
cover the amount to be repaid, or any part thereof,
by deductions from any regular compensation, tem-
porary enhanced regular unemployment compensa-
tion, or temporary supplemental unemployment com-
pensation payable to such individual under this title
or from any unemployment compensation payable to
such individual under any Federal unemployment
compensation law administered by the State agency
or under any other Federal law administered by the
State agency which provides for the payment of any
assistance or allowance with respect to any week of
unemployment, during the 3-year period after the
date such individuals received the payment of the
temporary enhanced regular unemployment com-
pensation or temporary supplemental unemployment
compensation to which such individuals were not en-
titled, except that no single deduction may exceed 50
percent of the weekly benefit amount from which
such deduction is made.
(2) OPPORTUNITY FOR HEARING.—No repay-
ment shall be required, and no deduction shall be
made, until a determination has been made, notice
thereof and an opportunity for a fair hearing has
been given to the individual, and the determination
has become final.
(d) REVIEW.—Any determination by a State agency
under this section shall be subject to review in the same
manner and to the same extent as determinations under
the State unemployment compensation law, and only in
that manner and to that extent.
SEC. 307. DEFINITIONS.
In this title the terms ‘‘compensation’’, ‘‘regular com-
pensation’’, ‘‘extended compensation’’, ‘‘additional com-
pensation’’, ‘‘benefit year’’, ‘‘base period’’, ‘‘State’’, ‘‘State
agency’’, ‘‘State law’’, and ‘‘week’’ have the respective
meanings given such terms under section 205 of the Fed-
eral-State Extended Unemployment Compensation Act of
1970.
SEC. 308. APPLICABILITY.
(a) IN GENERAL.—An agreement entered into under
this title shall apply to weeks of unemployment—
(1) beginning after the date on which such
agreement is entered into; and
(2) ending before January 1, 2003.
(b) SPECIFIC RULES.—
(1) IN GENERAL.—Under such an agreement,
the following rules shall apply:
(A) ALTERNATIVE BASE PERIODS.—
(i) APPLICABILITY.—The payment of
temporary enhanced regular unemployment
compensation by reason of the condition
described in section 302(b)(2)(A) (relating
to alternative base periods) shall not apply
except in the case of initial claims filed on
or after the first day of the week that in-
cludes September 11, 2001.
(ii) NONRETROACTIVITY.—The weekly
benefit amount payable with respect to
weeks of regular compensation and tem-
porary supplemental unemployment com-
pensation shall not be recalculated as a re-
sult of the application of the condition de-
scribed in clause (i) with respect to an in-
dividual who was receiving any unemploy-
ment compensation as of the date on which
the State enters into such an agreement.
(B) PART-TIME
EMPLOYMENT
AND
IN-
CREASED
BENEFITS.—The payment of tem-
porary enhanced regular unemployment com-
pensation by reason of the conditions described
in subparagraphs (B) and (C) of section
302(b)(2) (relating to part-time employment
and increased benefits, respectively) shall apply
to weeks of unemployment described in sub-
section (a), regardless of the date on which an
individual’s initial claim for benefits is filed.
(C) ELIGIBILITY FOR TEMPORARY SUPPLE-
MENTAL
UNEMPLOYMENT
COMPENSATION.—
The payment of temporary supplemental unem-
ployment compensation pursuant to section
302(b)(1)(B) shall not apply except in the case
of individuals who meet either the condition de-
scribed in subclause (I) or subclause (II) of
clause (i) of such section on or after the first
day of the week that includes September 11,
2001.
(2) REAPPLICATION PROCESS.—
(A) ALTERNATIVE BASE PERIODS.—In the
case of an individual who filed an initial claim
for regular compensation on or after the first
day of the week that includes September 11,
2001, and before the date that the State en-
tered into an agreement under subsection (a)(1)
that was denied as a result of the application
of the base period that applied under the State
law prior to the date on which the State entered
into such agreement, such individual—
(i) may refile a claim for temporary
enhanced regular unemployment compensa-
tion based on the condition described in
section 302(b)(2)(A) (relating to alter-
native base periods) on or after the date on
which the State enters into such agreement
and before the date on which such agree-
ment terminates; and
(ii) if eligible, shall be entitled to such
compensation only for weeks of unemploy-
ment described in subsection (a) beginning
on or after the date on which the indi-
vidual files such claim.
(B) PART-TIME
EMPLOYMENT.—In the
case of an individual who before the date that
the State entered into an agreement under sub-
section (a)(1) was denied regular compensation
under the State law’s provisions relating to
availability for work, active search for work, or
refusal to accept work, solely by virtue of the
fact that such individual is seeking, or available
for, only part-time (and not full-time) work,
such individual—
(i) may refile a claim for temporary
enhanced regular unemployment compensa-
tion based on the condition described in
section 302(b)(2)(B) (relating to part-time
employment) on or after the date on which
the State enters into the agreement under
subsection (a)(1) and before the date on
which such agreement terminates; and
(ii) if eligible, shall be entitled to such
compensation only for weeks of unemploy-
ment described in subsection (a) beginning
on or after the date on which the indi-
vidual files such claim.
(3) NO RETROACTIVE PAYMENTS FOR WEEKS
PRIOR TO AGREEMENT.—No amounts shall be pay-
able to an individual under an agreement entered
into under this title for any week of unemployment
prior to the week beginning after the date on which
such agreement is entered into.
SEC. 309. RULE OF CONSTRUCTION REGARDING CHANGES
TO STATE LAW.
Nothing in this title shall be construed as requiring
a State to modify the laws of such State in order to enter
into an agreement under this title or to comply with the
provisions of the agreement described in section 302(b).
TITLE IV—HEALTH INSURANCE
COVERAGE OPTIONS FOR RE-
CENTLY UNEMPLOYED INDI-
VIDUALS AND THEIR FAMI-
LIES
SEC. 401. PREMIUM ASSISTANCE FOR COBRA CONTINU-
ATION COVERAGE FOR INDIVIDUALS AND
THEIR FAMILIES.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, the Secretary of
the Treasury, in consultation with the Secretary of
Labor, shall establish a program under which 75
percent of the premium for COBRA continuation
coverage shall be provided for an individual who—
(A) at any time during the period that be-
gins on September 11, 2001, and ends on De-
cember 31, 2002, is separated from employ-
ment; and
(B) is eligible for, and has elected coverage
under, COBRA continuation coverage.
(2) INCLUSION
OF
CERTAIN
OTHER
INDIVID-
UALS.—
(A) IN GENERAL.—For purposes of para-
graph (1), the spouse, child, or other individual
who was an insured under health insurance cov-
erage of an individual who was killed as a result
of the terrorist-related aircraft crashes on Sep-
tember 11, 2001, or as a result of any other
terrorist-related event occurring during the pe-
riod described in that paragraph, and who is el-
igible for, and has elected coverage under,
COBRA continuation coverage shall be eligible
for premium assistance under the program es-
tablished under this section.
(B) OTHER
INDIVIDUALS.—For purposes
of paragraph (1), an individual who, at any
time during the period described in paragraph
(1)(A)—
(i) elects to take a voluntary leave
program offered by their employer after
the employer has announced that employee
separations will occur as a result of the
terrorist-related aircraft crashes on Sep-
tember 11, 2001, or as a result of any
other terrorist-related event occurring dur-
ing the period described in that paragraph;
(ii) is eligible under such voluntary
leave program, and has elected, to continue
their health insurance coverage under a
group health plan through payment of 100
percent of the premium for such coverage;
and
(iii) is not eligible for COBRA con-
tinuation coverage,
shall be eligible for premium assistance for 75
percent of the premium for such health insur-
ance coverage under the program established
under this section in the same manner as an in-
dividual who is eligible for premium assistance
under this section for COBRA continuation cov-
erage.
(3) TEMPORARY EXTENSION OF ELECTION PE-
RIOD FOR CERTAIN SEPARATED INDIVIDUALS.—Not-
withstanding any other provision of law, the election
period for COBRA continuation coverage with re-
spect to any individual who meets the requirements
of paragraph (1)(A), but for whom such period has
expired as of the date of the enactment of this Act,
shall not end before the date that is 60 days after
the date the individual receives the supplemental no-
tice required under subsection (g)(3).
(4) IMMEDIATE
IMPLEMENTATION.—The pro-
gram established under this section shall be imple-
mented without regard to whether or not final regu-
lations to carry out such program have been promul-
gated by the date described in paragraph (1).
(b) LIMITATION OF PERIOD OF PREMIUM ASSIST-
ANCE.—
(1) IN
GENERAL.—Premium assistance pro-
vided in accordance with this section shall end with
respect to an individual on the earlier of—
(A) the date the individual is no longer
covered under COBRA continuation coverage;
or
(B) 12 months after the date the indi-
vidual is first enrolled in the premium assist-
ance program established under this section.
(2) NO
ASSISTANCE
AFTER
DECEMBER
31,
2002.—No premium assistance may be provided
under this section for any month beginning after
December 31, 2002.
(c) PAYMENT ARRANGEMENTS; CREDITING OF AS-
SISTANCE.—
(1) PROVISION OF ASSISTANCE.—
(A) DIRECT PAYMENT ARRANGEMENTS.—
(i) IN GENERAL.—Premium assistance
shall be provided under the program estab-
lished under this section through direct
payment arrangements with a group health
plan (including a multiemployer plan), an
issuer of health insurance coverage, an ad-
ministrator, an employer, or other entity,
that collects the monthly premium for the
COBRA continuation coverage for such in-
dividual, as appropriate with respect to the
individual provided such assistance.
(ii) IMMEDIATE, PROVISIONAL
PAY-
MENT OF ASSISTANCE.—Payment of such
assistance shall commence beginning with
the month in which the Secretary of the
Treasury receives a copy of the eligibility
and enrollment forms completed by the in-
dividual in accordance with subsection (g).
The payment of such assistance shall be
subject to verification by the Secretary of
the Treasury or the Secretary of Labor of
the individual’s eligibility for such assist-
ance.
(B) ADVANCE PAYMENT; RETROSPECTIVE
ADJUSTMENT.—The Secretary of the Treasury
may make payments under this section for each
month on the basis of advance estimates of the
assistance to be provided under this section and
such other investigation as the Secretary of the
Treasury may find necessary, and may reduce
or increase the payments as necessary to adjust
for any overpayment or underpayment for prior
months.
(2) PREMIUMS
PAYABLE
BY
INDIVIDUAL
RE-
DUCED BY AMOUNT OF ASSISTANCE.—Premium as-
sistance provided under this section shall be credited
by the group health plan, issuer of health insurance
coverage, or an administrator against the premium
otherwise owed by the individual involved for
COBRA continuation coverage. Such coverage shall
not be terminated based on a failure to pay the full
amount of the monthly premium owed for the cov-
erage if an individual is current with the non-sub-
sidized portion of the monthly premium for the cov-
erage.
(d) APPLICATION OF FRAUD PREVENTION PROVI-
SIONS.—Sections 1128A and 1128B of the Social Security
Act (42 U.S.C. 1320a–7a, 1320a–7b) shall apply to the
provision of premium assistance under this section.
(e) LIMITATION ON ENTITLEMENT.—Nothing in this
section shall be construed as establishing any entitlement
of individuals described in paragraph (1) or (2) of sub-
section (a) to premium assistance under this section.
(f) DISREGARD OF SUBSIDIES FOR PURPOSES OF
FEDERAL AND STATE PROGRAMS.—Notwithstanding any
other provision of law, any premium assistance provided
to, or on behalf of, an individual under this section, shall
not be considered income or resources in determining eligi-
bility for, or the amount of assistance or benefits provided
under, any other Federal public benefit or State or local
public benefit.
(g) IMPLEMENTATION REQUIREMENTS.—
(1) CHANGE IN COBRA NOTICE.—
(A) IN GENERAL.—In the case of notices
provided under section 4980B(f)(6) of the In-
ternal Revenue Code of 1986, section 2206 of
the Public Health Service Act (42 U.S.C.
300bb–6), section 606 of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1166), or section 8905a(f)(2)(A) of title 5,
United States Code, with respect to individuals
who, during the period described in subsection
(a)(1)(A), become entitled to elect COBRA con-
tinuation coverage, such notices shall include an
additional notification to the recipient of the
availability of premium assistance for such cov-
erage under this section and for temporary
medicaid assistance under section 403 for the
remaining portion of COBRA continuation pre-
miums, in accordance with the requirements of
this subsection.
(B) ALTERNATIVE NOTICE.—In the case of
COBRA continuation coverage to which the no-
tice provision under such sections does not
apply, the Secretary of the Treasury, in con-
sultation with the Secretary of Labor, shall, in
coordination with administrators of the group
health plans (or other entities) that provide or
administer the COBRA continuation coverage
involved, assure the provision of such notice.
(C) FORM.—The requirement of the addi-
tional notification under this paragraph may be
met by amendment of existing notice forms or
by inclusion of a separate document with the
notice otherwise required.
(2) SPECIFIC REQUIREMENTS.—Each additional
notification under paragraph (1) shall include the
following:
(A) The forms necessary for establishing
eligibility and enrollment in the premium assist-
ance program established under this section in
connection with the COBRA continuation cov-
erage with respect to individuals described in
paragraph (1) or (2) of subsection (a).
(B) The following displayed in a prominent
manner:
(i) The name, address, and telephone
number necessary to contact the employer,
administrator, and any other person main-
taining relevant information in connection
with how to enroll for the premium assist-
ance.
(ii) The toll-free telephone number
and Internet website address established
under paragraph (4)(A)(i).
(iii) The name, address, and telephone
number for the group health plan (includ-
ing a multiemployer plan), issuer of health
insurance coverage, administrator, an em-
ployer, or other entity (as appropriate with